Please answer questions 3-8. I Understand the first two but I am not 100% on the rest.

FIN 5090 Homework Problems #1 Due September 22, 2015 Please show your work! If you complete calculations on a calculator or computer, provide support for such calculations. For example, if you complete a time value of money calculation on the calculator, indicate what values you input for N, I, PV, PMT, and FV. Student Name: _______________________________________ 1) Chuck Tomkovick is planning to invest $33,000 today in a mutual fund that will provide a return of 11 percent each year. What will be the value of the investment in ten years 2) Roy Gross is considering an investment that pays 7.30 percent. How much will he have to invest today so that the investment will be worth $21,000 in six years? 3) Jeremy Fenloch borrowed some money from his friend and promised to repay him the amounts of $1,364, $2,435, $2,445, $2,346, and $1,355 over the next five years. If the friend normally discounts investment cash flows at 6.4 percent annually, how much did Jeremy borrow? 4) BA Corp is issuing a 10-year bond with a coupon rate of 9.04 percent. The interest rate for similar bonds is currently 7.22 percent. Assuming annual payments, what is the value of the bond? 5) Champagne, Inc., had revenues of $12 million, cash operating expenses of $8 million, and depreciation and amortization of $1.5 million during 2014. The firm purchased $700,000 of equipment during the year while increasing its inventory by $500,000 (with no corresponding increase in current liabilities). The marginal tax rate for Champagne is 30 percent. What is Champagne's free cash flow for 2014? 6) The expected return on the market portfolio is 12 percent, and the return on the risk-free security is 5 percent. What is the expected return on a portfolio with a beta equal to 0.5? 7) Capital Co. has a capital structure, based on current market values, that consists of 48 percent debt, 15 percent preferred stock, and 37 percent common stock. If the returns required by investors are 12 percent, 12 percent, and 19 percent for the debt, preferred stock, and common stock, respectively, what is Capital's after-tax WACC? Assume that the firm's marginal tax rate is 40 percent. 8) The Imaginary Products Co. currently has debt with a market value of $275 million outstanding. The debt consists of 9 percent coupon bonds (semiannual coupon payments) which have a maturity of 15 years and are currently priced at $886.55 per bond. The firm also has an issue of 2 million preferred shares outstanding with a market price of $14. The preferred shares pay an annual dividend of $1.20. Imaginary also has 14 million shares of common stock outstanding with a price of $20.00 per share. The firm is expected to pay a $2.20 common dividend one year from today, and that dividend is expected to increase by 9 percent per year forever. If Imaginary is subject to a 40 percent marginal tax rate, then what is the firm's weighted average cost of capital? 8a) Calculate the Weights for debt, common equity, and preferred equity. 8b) Calculate the cost of debt. 8c) Calculate the cost of preferred equity. 8d) Calculate the cost of common equity. 8e) What is the firm's weighted average cost of capital