Question: Download the Week 7 Problem-Set document. Complete the following four problem sets. Each problem set has a specific point value. There is partial credit so


Download the Week 7 Problem-Set document. Complete the following four problem sets. Each problem set has a specific point value. There is partial credit so please be sure to show all of your work. Problem #1 You have just been hired as a consultant for a nonprofit hospital. In doing some research you calculate that their cost of capital is comprised of 40% debt and 60% equity. Their before tax cost of debt (YTM) is 10%. You use various methods to estimate the cost of equity and come up with 12%. Given this information calculate the weighted average cost of capital (WACC). (15 points) Problem #2 A hospital is considering an investment project, which has the following cash flows: Year Cash Flow O $1,000 1 400 3 300 500 400 The company's cost of capital is 10 percent. What is the project's payback, internal rate of return, and net present value? What do these metrics tell you about this proposed project? (30 points)
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
