1. BBA-308CHAPTER 13ASSIGNMENT

This assignment is on topics related to Chapter 13 of Berk, DeMarzo, and Harford, Fundamentals of Corporate Finance

The assignment has a total of 10 questions.

You provide the answer. There is only one correct answer

When the question requires answers of percentage values, express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05 OR if the answer is one thousand dollars write 1000.

Round your answers to the third decimal space.

1) Suppose Corporation A has a book (face) debt value of $9.9 Million USD, trading at 66% of its face value. It also has book equity of $15 Million USD, and 8 Million shares of common stock trading at $11 per share. What weights should Corporation A use for Debt capital when calculating its WACC? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05

2) Suppose Corporation A has a book (face) debt value of $9.9 Million USD, trading at 66% of its face value. It also has book equity of $15 Million USD, and 8 Million shares of common stock trading at $11 per share. What weights should Corporation A use for Equity capital when calculating its WACC? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05

3) Last year Firm D had a weighted interest rate of debt of 13%. If the corporate tax was 35% for that firm. What was the after tax interest rate on debt for firm D? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05

4) JJ firm issues a constant amount of preferred dividends at an annual value of $2. Its current preferred stock price is $22. What is the cost of preferred equity for JJ Firm? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05

5) Assume that the equity beta for JJ is 0.92. The Yield on 10-year treasuries is 4%, and that the market risk premium for the year is 6%. What would be the cost of equity for JJ? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05

6) If the dividends for JJ firm are the same for common and preferred stock, and the price for common stock is $10. What would be the cost of equity for JJ firm? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05

7) Using the results of Problems 5 and 6. If you are to be conservative in your approach, What is the cost of Equity that you will use in estimating the WACC? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05

8) The expected return on CA's equity is 9%, and the firm has a yield to maturity on its debt of 4%. Debt accounts for 34%, common equity for 60% and preferred equity for 6% of CA's total market value. If its tax rate is 35%, and the cost of preferred equity is 40%, What is this firm's WACC? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05

9) ABI Construction has a face debt value of $17 Million USDs trading at 96% with a pre-tax weighted cost of 7%. ABI common equity for the year was valued at $45 Million of USDs and preferred equity for $2.5 Million of USDs. The Preferred equity rate was calculated to be 22%. However, the common equity was to be calculated using CAPM approach, with a 3% risk free rate and a 8% market risk premium rate, assuming a 1 Beta. If the tax rate is 35%, What is this firm's WACC? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05

10) Suppose ABI Construction is considering investing in a new project of urban development. The cost of the project is $19 Millions of USD. ABI expects that the non-incremental yearly cash flows from the project are $4 Million of USD for the next five years; e.g. that is $4 Million of USD each year. Using the calculated WACC in the previous question, what is the Net Present Value (NPV) of the project? Note: Express your answers in strictly numerical terms. For example, if the answer is five million dollars, write 5000000 as an answer.

2. BBA-308 CHAPTER 14 ASSIGNMENT

The assignment has a total of 7 questions.

You provide the answer. There is only one correct answer

When the question requires answers of percentage values, express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05. AND If your answer is one million dollars, write: 1000000

1) You founded your firm with a contribution of $449365, receiving 2000000 shares of stock. Since then, you sold 340000 stocks to Angel Investors.Now you are considering raising more capital from a Venture Capitalist. They will invest $4000000 and would receive 3000000 newly issued shares.What is the post-money valuation? Express the terms of your answer completely and in strictly numerical terms. For example: If your answer is one million dollars, write: 1000000.

2) You founded your firm with a contribution of $449365, receiving 2000000 shares of stock. Since then, you sold 340000 stocks to Angel Investors.Now you are considering raising more capital from a Venture Capitalist. They will invest $4000000 and would receive 3000000 newly issued shares.If this is the VC's first investment in the company, what percentage of the firm will they end up owning?Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer.

3) You founded your firm with a contribution of $449365, receiving 2000000 shares of stock. Since then, you sold 340000 stocks to Angel Investors.Now you are considering raising more capital from a Venture Capitalist. They will invest $4000000 and would receive 3000000 newly issued shares.If this is the VC's first investment in the company, what percentage will you own? Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer.

4) You founded your firm with a contribution of $449365, receiving 2000000 shares of stock. Since then, you sold 340000 stocks to Angel Investors.Now you are considering raising more capital from a Venture Capitalist. They will invest $4000000 and would receive 3000000 newly issued shares.If this is the VC's first investment in the company, what is the value of your shares? Express the terms of your answer completely and in strictly numerical terms. For example: If your answer is one million dollars, write: 1000000.

5) Company Detox, is a private company that designs, manufactures and distributes certain consumer products. In this fiscal year, Detox had revenues of $20 Millions of USDs and earnings of $7 of Millions of USDs.Detox company has filed a registration statement with the SEC for its IPO. If the industry average Price/Earnings ratio and Price/Revenues ratio for the recent fiscal year were 11 and 0.76 respectively.Estimate the IPO price for Detox Company using the Price/Earnings ratio and assuming that they will issue 16 Million share

6) Company Detox, is a private company that designs, manufactures and distributes certain consumer products. In this fiscal year, Detox had revenues of $20 Millions of USDs and earnings of $7 of Millions of USDs.Detox company has filed a registration statement with the SEC for its IPO. If the industry average Price/Earnings ratio and Price/Revenues ratio for the recent fiscal year were 11 and 0.76 respectively.Estimate the IPO price for Detox Company using the Price/Revenues ratio and assuming that they will issue 16 Million shares.

7) Consider the situation faced by the CFO of a company with a market capitalization of $400 Millions of USD, e.g.the firm has 16 million shares outstanding, so the shares are trading at $25 per share. The CFO needs to raise $75 Millions of USDs and announces a rights issue.Each existing shareholder is sent 6 right for every share he or she owns. The CFO has not decided how many rights will be required to purchase a share of new stock.At the current price per share, what is the maximum amount of rights the CFO can require stockholders for purchasing a share of new stock and so be able to raise the $75 Millions of USDs?

3. BBA-308 CHAPTER 15 ASSIGNMENT

The assignment has a total of 2 questions.

You provide the answer. There is only one correct answer

When the question requires answers of percentage values, express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05

Round your answers to three decimal spaces.

1) IBM has just issued a callable (at par) 6 year, 7.5% coupon bond with annual coupon payments. The bond can be called at par in one year or anytime thereafter on a coupon payment date.It has a price of $104 per $100 face value.What is the bond's yield to call? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05.

2) IBM has just issued a callable (at par) 7 year, 11% coupon bond with annual coupon payments. The bond can be called at par in one year or anytime thereafter on a coupon payment date.It has a price of $97 per $100 face value.What is the bond's yield to call? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05.

4. This assignment is on topics related to Chapter 16

The assignment has a total of 7 questions.

You provide the answer. There is only one correct answer

When the question requires answers of percentage values, express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05 or if your answer is one thousand dollars, write: 1000.

Round your answers to the third decimal space.

example, if the answer is $500, enter 500 as an answer.

1) Suppose you borrow $350500 when financing a coffee shop which is valued at $675000. You expect to generate a cash flow of $750000 at the end of the year. The cost of debt is 6%. What should the value of the equity be? Note: Express your answers in strictly numerical terms. For example, if the answer is $500, enter 500 as an answer.

2) Suppose you borrow $350500 when financing a coffee shop which is valued at $675000. You expect to generate a cash flow of $750000 at the end of the year. The cost of debt is 6%. What is the cost of equity? Note: Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05

3) Suppose you borrow $55000 when financing a coffee shop which is valued at $89000. Assume that the unlevered cost of capital for the coffee shop is 8.5% and that the cost of debt is valued at 4%. What should be the cost of equity of your firm? Note: Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05

4) ECB borrows $1500000 USDs by issuing 5-year bonds. ECB's cost of debt is 5%, so it will need to pay $75000 USDs in interest each year for the next 5 years, and then repay the principal $1500000 USDin year 5. ECB's marginal tax rate will remain 35 throughout this period.By how much (in USDs) does the interest tax shield increase the value of ECB? Note: Express your answers in strictly numerical terms. For example, if the answer is $500, enter 500 as an answer.

5) Axon Industries needs to raise $1700000USDs for a new investment project. If the firm issues 1-year debt, it may have to pay an interest rate of 8%, although Axon's managers believe that 7% would be a fair rate given the level of risk.If the firm issues equity, they believe the equity may be underpriced by 3%.What is the cost (in USDs) to current shareholders of financing the project out of retained earnings? Note: Express your answers in strictly numerical terms.

6) Axon Industries needs to raise $1700000 USDs for a new investment project. If the firm issues 1-year debt, it may have to pay an interest rate of 8%, although Axon's managers believe that 7% would be a fair rate given the level of risk.If the firm issues equity, they believe the equity may be underpriced by 3%.What is the cost (in USDs) to current shareholders of financing the project out of debt? Note: Express your answers in strictly numerical terms. For example, if the answer is $500, enter 500 as an answer.

7) Axon Industries needs to raise $1700000 USDs for a new investment project. If the firm issues 1-year debt, it may have to pay an interest rate of 8%, although Axon's managers believe that 7% would be a fair rate given the level of risk.If the firm issues equity, they believe the equity may be underpriced by 3%.What is the cost (in USDs) to current shareholders of financing the project out of equity? Note: Express your answers in strictly numerical terms. For example, if the answer is $500, enter 500 as an answer.

5. This assignment is on topics related to Chapter 17

The assignment has a total of 3 questions.

You provide the answer. There is only one correct answer

When the question requires answers of percentage values, express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05 or if your answer is one thousand dollars, write: 1000.

Round your answers to three decimal spaces.

1) Suppose a corporation currently has $400 Million of USDs in excess cash available to repurchase stock or pay dividends on its 9 million shares. Suppose the corporation decides to use the $400 Million to repurchase shares on the open market. If the current stock price is $16, what will be the price of the stock after the repurchase? Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer.

2) Rexton Oil is an all-equity firm with 1000 million of shares outstanding. Rexton currently has a cash flow of $450 Million of USDs and expects future free cash flows of $70 Millions per year. Management plans to use the cash to expand the firm's operations, which will in turn increase future cash free cash flows to $98 Millions per year. If the cost of capital of Rexton's investments is 10%, calculate the stock price for the company if the expansion where to happen. Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer.

3) Rexton Oil is an all-equity firm with 1000 million of shares outstanding. Rexton currently has a cash flow of $450 Million of USDs and expects future free cash flows of $70 Millions per year. Management plans to use the cash to expand the firm's operations, which will in turn increase future cash free cash flows to $98 Millions per year. If the cost of capital of Rexton's investments is 10%, calculate the stock price if the company decides to use the cash for a share repurchase rather than the expansion. Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer.

6. Instructions: The exam combines multiple choice questions and numerical answer questions. Each question has only one correct answer. For the numerical answer questions, express your answers in strictly numerical terms. For questions where the answer is a percentage amount if the answer is 5%, write 0.05. For questions where the answer is a dollar amount if your answer is one thousand dollars, write: 1000.

Round your answers to the third decimal space.

Question 1

Suppose you borrow $25000 when financing a tea shop which is valued at $53000. Assume that the unlevered cost equity of the coffee shop is 16% and that the cost of debt is valued at 6%. What is the value of equity of the tea shop?

Question 2

Suppose you borrow $25000 when financing a tea shop which is valued at $53000. Assume that the unlevered cost equity of the coffee shop is 16% and that the cost of debt is valued at 6%. What is the value of debt next period for the tea shop?

Question 3

Suppose you borrow $25000 when financing a tea shop which is valued at $53000. Assume that the unlevered cost equity of the coffee shop is 16% and that the cost of debt is valued at 6%. What is the value of the cash flow next period for the tea shop?

Question 4

Suppose you borrow $25000 when financing a tea shop which is valued at $53000. Assume that the unlevered cost equity of the coffee shop is 16% and that the cost of debt is valued at 6%. What is the average cost of capital of the tea shop?

Question 5

Suppose you borrow $25000 when financing a tea shop which is valued at $53000. Assume that the unlevered cost equity of the coffee shop is 16% and that the cost of debt is valued at 6%. What is the cost of equity of the tea shop?

ABC borrows $987500 by issuing a 3-year bond. ABC's cost of debt is constant at 7.5% and the marginal tax rate will remain constant at 35%. What is the value of the YEARLY interest payment ABC will make on the 3-year bond?

Question 6

Question 7

ABC borrows $987500 by issuing a 3-year bond. ABC's cost of debt is constant at 7.5% and the marginal tax rate will remain constant at 35%. How much does the interest tax shield increase the value of ABC? Hint: Use the interest rate of debt to calculate the present value of the future interest tax payments

Question 8"LC needs to raise $980000 for a new investment project. If the firm issues one-year debt, it may have to pay an interest rate of 3%, although LC's managers believe that 9% would be a fair rate given the level of risk. If the firm issues equity, they believe the equity may be underpriced by 25%. What is the cost to current shareholders of financing the project out of retained earnings?"

Question 9

"LC needs to raise $980000 for a new investment project. If the firm issues one-year debt, it may have to pay an interest rate of 3%, although LC's managers believe that 9% would be a fair rate given the level of risk. If the firm issues equity, they believe the equity may be underpriced by 25%. What is the cost to current shareholders of financing the project out of debt?"

Question 10

"LC needs to raise $980000 for a new investment project. If the firm issues one-year debt, it may have to pay an interest rate of 3%, although LC's managers believe that 9% would be a fair rate given the level of risk. If the firm issues equity, they believe the equity may be underpriced by 25%. What is the cost to current shareholders of financing the project out of equity?"

Question 11

Partition Corp. is an all-equity firm with 1500000 shares outstanding. Partition Corp has $10000000 in cash and expects future free cash flows of $20000000 per year. The cost of capital of Partition Corp. s investments is 8.5%. What would be the price of the stock (cum-dividend) if Partition Corp. where to issue dividends with the excess cash?

Question 12

Partition Corp. is an all-equity firm with 1500000 shares outstanding. Partition Corp has $10000000 in cash and expects future free cash flows of $20000000 per year. The cost of capital of Partition Corp. s investments is 8.5%. What would be the price of the stock (ex-dividend) if Partition Corp. where to issue dividends with the excess cash?

Question 13

Partition Corp. is an all-equity firm with 1500000 shares outstanding. Partition Corp has $10000000 in cash and expects future free cash flows of $20000000 per year. The cost of capital of Partition Corp. s investments is 8.5%. What would be the price of the stock if Partition Corp. where to perform a stock repurchase with the excess cash?

Question 14

Partition Corp. is an all-equity firm with 1500000 shares outstanding. Partition Corp has $10000000 in cash and expects future free cash flows of $20000000 per year. The cost of capital of Partition Corp. s investments is 8.5%. What is the amount of stock Partition Corp. could repurchase if the company performs a stock repurchase with the excess cash?

Question 15

What would be the amount of stock outstanding of Partition Corp. after a stock repurchase with the excess cash?

Question 16

"Consider now that the management at Partition Corp. plans instead to use the cash to expand the firm's operations, which will in turn increase future cash free cash flows to $55000000 per year. What would be the price of the stock if Partition Corp. where to perform the firm s expansion?"

Question 17

"Consider now that the management at Partition Corp. plans instead to use the cash to expand the firm's operations, which will in turn increase future cash free cash flows to $55000000 per year. What would be the valuation of Partition Corp. if the firm where to perform the expansion?"

Question 18

"Under perfect capital markets, the valuation of a company __________ on the level of leverage"

Question 19

"When corporate taxes are the only market imperfection considered,"

Question 20

"Under perfect capital markets, all else being held equal, with respect to the usage of excess cash, a shareholder __________ "

1. BBA-308CHAPTER 13ASSIGNMENT This assignment is on topics related to Chapter 13 of Berk, DeMarzo, and Harford, Fundamentals of Corporate Finance The assignment has a total of 10 questions. You provide the answer. There is only one correct answer When the question requires answers of percentage values, express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05 OR if the answer is one thousand dollars write 1000. Round your answers to the third decimal space. 1) Suppose Corporation A has a book (face) debt value of $9.9 Million USD, trading at 66% of its face value. It also has book equity of $15 Million USD, and 8 Million shares of common stock trading at $11 per share. What weights should Corporation A use for Debt capital when calculating its WACC? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05 2) Suppose Corporation A has a book (face) debt value of $9.9 Million USD, trading at 66% of its face value. It also has book equity of $15 Million USD, and 8 Million shares of common stock trading at $11 per share. What weights should Corporation A use for Equity capital when calculating its WACC? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05 3) Last year Firm D had a weighted interest rate of debt of 13%. If the corporate tax was 35% for that firm. What was the after tax interest rate on debt for firm D? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05 4) JJ firm issues a constant amount of preferred dividends at an annual value of $2. Its current preferred stock price is $22. What is the cost of preferred equity for JJ Firm? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05 5) Assume that the equity beta for JJ is 0.92. The Yield on 10-year treasuries is 4%, and that the market risk premium for the year is 6%. What would be the cost of equity for JJ? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05 6) If the dividends for JJ firm are the same for common and preferred stock, and the price for common stock is $10. What would be the cost of equity for JJ firm? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05 7) Using the results of Problems 5 and 6. If you are to be conservative in your approach, What is the cost of Equity that you will use in estimating the WACC? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05 8) The expected return on CA's equity is 9%, and the firm has a yield to maturity on its debt of 4%. Debt accounts for 34%, common equity for 60% and preferred equity for 6% of CA's total market value. If its tax rate is 35%, and the cost of preferred equity is 40%, What is this firm's WACC? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05 9) ABI Construction has a face debt value of $17 Million USDs trading at 96% with a pre-tax weighted cost of 7%. ABI common equity for the year was valued at $45 Million of USDs and preferred equity for $2.5 Million of USDs. The Preferred equity rate was calculated to be 22%. However, the common equity was to be calculated using CAPM approach, with a 3% risk free rate and a 8% market risk premium rate, assuming a 1 Beta. If the tax rate is 35%, What is this firm's WACC? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05 10) Suppose ABI Construction is considering investing in a new project of urban development. The cost of the project is $19 Millions of USD. ABI expects that the non-incremental yearly cash flows from the project are $4 Million of USD for the next five years; e.g. that is $4 Million of USD each year. Using the calculated WACC in the previous question, what is the Net Present Value (NPV) of the project? Note: Express your answers in strictly numerical terms. For example, if the answer is five million dollars, write 5000000 as an answer. 2. BBA-308 CHAPTER 14 ASSIGNMENT The assignment has a total of 7 questions. You provide the answer. There is only one correct answer When the question requires answers of percentage values, express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05. AND If your answer is one million dollars, write: 1000000 1) You founded your firm with a contribution of $449365, receiving 2000000 shares of stock. Since then, you sold 340000 stocks to Angel Investors. Now you are considering raising more capital from a Venture Capitalist. They will invest $4000000 and would receive 3000000 newly issued shares. What is the post-money valuation? Express the terms of your answer completely and in strictly numerical terms. For example: If your answer is one million dollars, write: 1000000. 2) You founded your firm with a contribution of $449365, receiving 2000000 shares of stock. Since then, you sold 340000 stocks to Angel Investors. Now you are considering raising more capital from a Venture Capitalist. They will invest $4000000 and would receive 3000000 newly issued shares. If this is the VC's first investment in the company, what percentage of the firm will they end up owning? Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer. 3) You founded your firm with a contribution of $449365, receiving 2000000 shares of stock. Since then, you sold 340000 stocks to Angel Investors. Now you are considering raising more capital from a Venture Capitalist. They will invest $4000000 and would receive 3000000 newly issued shares. If this is the VC's first investment in the company, what percentage will you own? Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer. 4) You founded your firm with a contribution of $449365, receiving 2000000 shares of stock. Since then, you sold 340000 stocks to Angel Investors. Now you are considering raising more capital from a Venture Capitalist. They will invest $4000000 and would receive 3000000 newly issued shares. If this is the VC's first investment in the company, what is the value of your shares? Express the terms of your answer completely and in strictly numerical terms. For example: If your answer is one million dollars, write: 1000000. 5) Company Detox, is a private company that designs, manufactures and distributes certain consumer products. In this fiscal year, Detox had revenues of $20 Millions of USDs and earnings of $7 of Millions of USDs. Detox company has filed a registration statement with the SEC for its IPO. If the industry average Price/Earnings ratio and Price/Revenues ratio for the recent fiscal year were 11 and 0.76 respectively. Estimate the IPO price for Detox Company using the Price/Earnings ratio and assuming that they will issue 16 Million share 6) Company Detox, is a private company that designs, manufactures and distributes certain consumer products. In this fiscal year, Detox had revenues of $20 Millions of USDs and earnings of $7 of Millions of USDs. Detox company has filed a registration statement with the SEC for its IPO. If the industry average Price/Earnings ratio and Price/Revenues ratio for the recent fiscal year were 11 and 0.76 respectively. Estimate the IPO price for Detox Company using the Price/Revenues ratio and assuming that they will issue 16 Million shares. 7) Consider the situation faced by the CFO of a company with a market capitalization of $400 Millions of USD, e.g. the firm has 16 million shares outstanding, so the shares are trading at $25 per share. The CFO needs to raise $75 Millions of USDs and announces a rights issue. Each existing shareholder is sent 6 right for every share he or she owns. The CFO has not decided how many rights will be required to purchase a share of new stock. At the current price per share, what is the maximum amount of rights the CFO can require stockholders for purchasing a share of new stock and so be able to raise the $75 Millions of USDs? 3. BBA-308 CHAPTER 15 ASSIGNMENT The assignment has a total of 2 questions. You provide the answer. There is only one correct answer When the question requires answers of percentage values, express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05 Round your answers to three decimal spaces. 1) IBM has just issued a callable (at par) 6 year, 7.5% coupon bond with annual coupon payments. The bond can be called at par in one year or anytime thereafter on a coupon payment date. It has a price of $104 per $100 face value. What is the bond's yield to call? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05. 2) IBM has just issued a callable (at par) 7 year, 11% coupon bond with annual coupon payments. The bond can be called at par in one year or anytime thereafter on a coupon payment date. It has a price of $97 per $100 face value. What is the bond's yield to call? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05. 4. This assignment is on topics related to Chapter 16 The assignment has a total of 7 questions. You provide the answer. There is only one correct answer When the question requires answers of percentage values, express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05 or if your answer is one thousand dollars, write: 1000. Round your answers to the third decimal space. example, if the answer is $500, enter 500 as an answer. 1) Suppose you borrow $350500 when financing a coffee shop which is valued at $675000. You expect to generate a cash flow of $750000 at the end of the year. The cost of debt is 6%. What should the value of the equity be? Note: Express your answers in strictly numerical terms. For example, if the answer is $500, enter 500 as an answer. 2) Suppose you borrow $350500 when financing a coffee shop which is valued at $675000. You expect to generate a cash flow of $750000 at the end of the year. The cost of debt is 6%. What is the cost of equity? Note: Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05 3) Suppose you borrow $55000 when financing a coffee shop which is valued at $89000. Assume that the unlevered cost of capital for the coffee shop is 8.5% and that the cost of debt is valued at 4%. What should be the cost of equity of your firm? Note: Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05 4) ECB borrows $1500000 USDs by issuing 5-year bonds. ECB's cost of debt is 5%, so it will need to pay $75000 USDs in interest each year for the next 5 years, and then repay the principal $1500000 USD in year 5. ECB's marginal tax rate will remain 35 throughout this period. By how much (in USDs) does the interest tax shield increase the value of ECB? Note: Express your answers in strictly numerical terms. For example, if the answer is $500, enter 500 as an answer. 5) Axon Industries needs to raise $1700000 USDs for a new investment project. If the firm issues 1-year debt, it may have to pay an interest rate of 8%, although Axon's managers believe that 7% would be a fair rate given the level of risk. If the firm issues equity, they believe the equity may be underpriced by 3%.What is the cost (in USDs) to current shareholders of financing the project out of retained earnings? Note: Express your answers in strictly numerical terms. 6) Axon Industries needs to raise $1700000 USDs for a new investment project. If the firm issues 1-year debt, it may have to pay an interest rate of 8%, although Axon's managers believe that 7% would be a fair rate given the level of risk. If the firm issues equity, they believe the equity may be underpriced by 3%.What is the cost (in USDs) to current shareholders of financing the project out of debt? Note: Express your answers in strictly numerical terms. For example, if the answer is $500, enter 500 as an answer. 7) Axon Industries needs to raise $1700000 USDs for a new investment project. If the firm issues 1-year debt, it may have to pay an interest rate of 8%, although Axon's managers believe that 7% would be a fair rate given the level of risk. If the firm issues equity, they believe the equity may be underpriced by 3%.What is the cost (in USDs) to current shareholders of financing the project out of equity? Note: Express your answers in strictly numerical terms. For example, if the answer is $500, enter 500 as an answer. 5. This assignment is on topics related to Chapter 17 The assignment has a total of 3 questions. You provide the answer. There is only one correct answer When the question requires answers of percentage values, express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05 or if your answer is one thousand dollars, write: 1000. Round your answers to three decimal spaces. 1) Suppose a corporation currently has $400 Million of USDs in excess cash available to repurchase stock or pay dividends on its 9 million shares. Suppose the corporation decides to use the $400 Million to repurchase shares on the open market. If the current stock price is $16, what will be the price of the stock after the repurchase? Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer. 2) Rexton Oil is an all-equity firm with 1000 million of shares outstanding. Rexton currently has a cash flow of $450 Million of USDs and expects future free cash flows of $70 Millions per year. Management plans to use the cash to expand the firm's operations, which will in turn increase future cash free cash flows to $98 Millions per year. If the cost of capital of Rexton's investments is 10%, calculate the stock price for the company if the expansion where to happen. Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer. 3) Rexton Oil is an all-equity firm with 1000 million of shares outstanding. Rexton currently has a cash flow of $450 Million of USDs and expects future free cash flows of $70 Millions per year. Management plans to use the cash to expand the firm's operations, which will in turn increase future cash free cash flows to $98 Millions per year. If the cost of capital of Rexton's investments is 10%, calculate the stock price if the company decides to use the cash for a share repurchase rather than the expansion. Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer. 6. Instructions: The exam combines multiple choice questions and numerical answer questions. Each question has only one correct answer. For the numerical answer questions, express your answers in strictly numerical terms. For questions where the answer is a percentage amount if the answer is 5%, write 0.05. For questions where the answer is a dollar amount if your answer is one thousand dollars, write: 1000. Round your answers to the third decimal space. Question 1 Suppose you borrow $25000 when financing a tea shop which is valued at $53000. Assume that the unlevered cost equity of the coffee shop is 16% and that the cost of debt is valued at 6%. What is the value of equity of the tea shop? Question 2 Suppose you borrow $25000 when financing a tea shop which is valued at $53000. Assume that the unlevered cost equity of the coffee shop is 16% and that the cost of debt is valued at 6%. What is the value of debt next period for the tea shop? Question 3 Suppose you borrow $25000 when financing a tea shop which is valued at $53000. Assume that the unlevered cost equity of the coffee shop is 16% and that the cost of debt is valued at 6%. What is the value of the cash flow next period for the tea shop? Question 4 Suppose you borrow $25000 when financing a tea shop which is valued at $53000. Assume that the unlevered cost equity of the coffee shop is 16% and that the cost of debt is valued at 6%. What is the average cost of capital of the tea shop? Question 5 Suppose you borrow $25000 when financing a tea shop which is valued at $53000. Assume that the unlevered cost equity of the coffee shop is 16% and that the cost of debt is valued at 6%. What is the cost of equity of the tea shop? Question 6 ABC borrows $987500 by issuing a 3-year bond. ABC's cost of debt is constant at 7.5% and the marginal tax rate will remain constant at 35%. What is the value of the YEARLY interest payment ABC will make on the 3-year bond? Question 7 ABC borrows $987500 by issuing a 3-year bond. ABC's cost of debt is constant at 7.5% and the marginal tax rate will remain constant at 35%. How much does the interest tax shield increase the value of ABC? Hint: Use the interest rate of debt to calculate the present value of the future interest tax payments Question 8"LC needs to raise $980000 for a new investment project. If the firm issues one-year debt, it may have to pay an interest rate of 3%, although LC's managers believe that 9% would be a fair rate given the level of risk. If the firm issues equity, they believe the equity may be underpriced by 25%. What is the cost to current shareholders of financing the project out of retained earnings?" Question 9 "LC needs to raise $980000 for a new investment project. If the firm issues one-year debt, it may have to pay an interest rate of 3%, although LC's managers believe that 9% would be a fair rate given the level of risk. If the firm issues equity, they believe the equity may be underpriced by 25%. What is the cost to current shareholders of financing the project out of debt?" Question 10 "LC needs to raise $980000 for a new investment project. If the firm issues one-year debt, it may have to pay an interest rate of 3%, although LC's managers believe that 9% would be a fair rate given the level of risk. If the firm issues equity, they believe the equity may be underpriced by 25%. What is the cost to current shareholders of financing the project out of equity?" Question 11 Partition Corp. is an all-equity firm with 1500000 shares outstanding. Partition Corp has $10000000 in cash and expects future free cash flows of $20000000 per year. The cost of capital of Partition Corp. s investments is 8.5%. What would be the price of the stock (cum-dividend) if Partition Corp. where to issue dividends with the excess cash? Question 12 Partition Corp. is an all-equity firm with 1500000 shares outstanding. Partition Corp has $10000000 in cash and expects future free cash flows of $20000000 per year. The cost of capital of Partition Corp. s investments is 8.5%. What would be the price of the stock (ex-dividend) if Partition Corp. where to issue dividends with the excess cash? Question 13 Partition Corp. is an all-equity firm with 1500000 shares outstanding. Partition Corp has $10000000 in cash and expects future free cash flows of $20000000 per year. The cost of capital of Partition Corp. s investments is 8.5%. What would be the price of the stock if Partition Corp. where to perform a stock repurchase with the excess cash? Question 14 Partition Corp. is an all-equity firm with 1500000 shares outstanding. Partition Corp has $10000000 in cash and expects future free cash flows of $20000000 per year. The cost of capital of Partition Corp. s investments is 8.5%. What is the amount of stock Partition Corp. could repurchase if the company performs a stock repurchase with the excess cash? Question 15 What would be the amount of stock outstanding of Partition Corp. after a stock repurchase with the excess cash? Question 16 "Consider now that the management at Partition Corp. plans instead to use the cash to expand the firm's operations, which will in turn increase future cash free cash flows to $55000000 per year. What would be the price of the stock if Partition Corp. where to perform the firm s expansion?" Question 17 "Consider now that the management at Partition Corp. plans instead to use the cash to expand the firm's operations, which will in turn increase future cash free cash flows to $55000000 per year. What would be the valuation of Partition Corp. if the firm where to perform the expansion?" Question 18 "Under perfect capital markets, the valuation of a company __________ on the level of leverage" Question 19 "When corporate taxes are the only market imperfection considered," Question 20 "Under perfect capital markets, all else being held equal, with respect to the usage of excess cash, a shareholder __________ &quot