answer questions

C D E F G H M Number of shares common stock 1 000 000 Market Market Current assets 9 505 000 Current liabilities 1935 000 Weights Costs Fixed assets 12 408 000 Notes payable 8 676 000 Long-term debt 3 000 000 Common stock 1 000 000 Retained earnings 7 302 000 Total assets 21 913 000 Total liabilities and equity 21 913 000 MV Capital Structure MARKET DEBT CALCULATIONS 1. Whay are market values used in calculating the weighted WACC average cost of capital? Cell for "1" 1,0 Interest rate on existing short-term debt 0,0400 4. Why are current liabilities not included in the weighted AT cost of short-term debt average cost of capital calculations? Par value of debt 1000 Coupon rate 0,0550 Coupon amount Maturity in years 10 YTM exisiting bonds 0,0975 MTR 0,3200 2. Why are retained earnings not factored into the AT cost of long-term debt weighted average cost of capital? Current PV of bonds 5. What is capital structure? What is capital? Number of bonds outstanding COMMON STOCK CALCULATIONS Risk-free rate 0,022 3. What are the two models for calculating the cost of equity Market risk premium 0,0560 shown to left. What are their respective advantages, and Beta 0,9800 why are they averaged? 6. What is WACC, and what is its significance for a firm? Cost of equity CAPM Price of common stock 13,25 Next expected dividend 1,25 Expected growth 0,03 Cost of equity Cost of equity average