1) "Lobu" is a company that obtains its financing resources from debt and equity. The company has a debt of 400 million dollars, the interest rate of 8%. Lobu owns 100 million shares, the share price is $12 per share. Suppose Lobu's beta is 0.8; Risk free rate 6%, market return 9% and tax rate 40%.

A) Calculate Lobu's WACC

B) if Lobu has an expansion project that requires an investment of 30 million dollars and generates 15 million dollars per year (3 years). Calculate the NPV of the project (use WACC as discount rate)

2) Vitro wants to invest in a new Project with great expectations. The initial investment is $9,000. In the first year, the firm expects a cash inflow of $10,000 and a cash outflow of $1,000. The second and third periods expect to grow their cash inflows by 20% per year and their cash outflows by 10% per year. Calculate the MIRR of the project. (10% Financing Rate and 15% Reinvestment Rate)

3) Calculate the after-tax cost of debt under each of the following conditions:

1. interest rate, 13 percent; tax rate, 5 percent.
2. interest rate, 13 percent; tax rate, 15 percent.
3. interest rate, 13 percent; Tax rate. 18 percent

4) The expected return of the market is 14%, the Covariance between the company and the return of the market is 0.45. The risk-free rate is 6% and the standard deviation of the market return is 0.68.

1. Calculate beta.
2. Calculate CAPM

5) The shares of Company "X" have a Beta equal to 1.2. In the stock market, its own resources (equity) represent 40% of the total amount of its financing sources. It is well known that in the market the return that could be obtained without risk is 3% and the expected return of the market is 9%. The tax rate is 35%.

Calculate the WAAC before and after taxes if the cost of debt is 17%

Answer rating: 100% (QA)

Calculation of Lobus WACC Given Debt 400 million Interest rate on debt 8 Number of shares 100 million Share price 12 Beta 08 Riskfree rate 6 Market return 9 Tax rate 40 A Calculation of Cost of Equity ... View the full answer