58 890
Assignments Done
Successfully Done
In March 2018
Your physics homework can be a real challenge, and the due date can be really close — feel free to use our assistance and get the desired result.
Be sure that math assignments completed by our experts will be error-free and done according to your instructions specified in the submitted order form.
Our experts will gladly share their knowledge and help you with programming homework. Keep up with the world’s newest programming trends.

Answer on Finance Question for Weah

Question #42114
A project generates net (after-tax) cash flows of $20 million every year for 4 years. The investment is $48 million. The tax rate is 40%. The firm has a target debt ratio (debt ratio = debt/value) of 45%.

The firm’s current bonds have 5 years left to maturity, a coupon rate of 7% with annual coupons, a face value of $1000 and currently trade for $960. The (before-tax) cost on any new debt will be the same as the yield to maturity on the current bonds.

For the equity, they will use $6,000,000 in preferred stock and the rest will be from retained earnings. The preferred stock has a dividend of $4 with a price of $42. Issue costs on preferred stock are $2.

To estimate the cost of retained earnings, the firm expects to pay a dividend of $2.5 per share next year. The retention rate is 40% and the return on equity is 25%. The current stock price is $50.

Use the weighted average cost of capital (WACC) to find the net present value (NPV) of the project.
Expert's answer

Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!


No comments. Be first!

Leave a comment

Ask Your question