TechnoTCL, Inc. ($ 000's) 12/31/2021 12/31/2022 12/31/2023 Current Assets Cash And Cash Equivalents 9,157 10,607 8,719 Short Term Investments 6,966 8,897 270 Net Receivables 6,693 7,021 7,140 Inventory 2,722 2,944 3,126 Other Current Assets 31 43 2,042 Total Current Assets 25,569 29,512 21,297 Long Term Investments 1,949 2,039 2,407 Property Plant and Equipment 16,590 17,237 17,587 Other Assets 635 910 5,122 Total Assets 72,604 78,274 77,042 Current Liabilities Accounts Payable 6,157 6,724 7,211 Short/Current Long Term Debt 4,400 4,017 3,951 Other Current Liabilities 3,870 4,112 6,601 Total Current Liabilities 14,427 14,853 17,763 Long Term Debt 30,052 33,793 28,293 Other Liabilities 11,102 14,522 12,611 Total Liabilities 55,581 63,168 58,667 Stockholders' Equity Total Stockholder Equity 17,023 15,106 18,375 12/31/2021 12/31/2022 12/31/2023

Revenue Total Revenue 56,519 57,902 51,728 Cost of Revenue 25,400 25,340 23,502 Gross Profit 31,119 32,562 28,226 Operating Expenses Selling General and Administrative 21,226 20,706 19,184 Operating Income or Loss 9,893 11,856 9,042 Income from Continuing Operations Other Income/Expenses Net - -1,508 -1,507 -1,148 Interest Expense 1,207 1,288 1,220 Income Before Tax 7,178 9,061 6,674 Income Tax Expense 1,957 4,130 2,696 Net Income 5,221 4,931 3,978

Suppose that TechnoTLC is considering a new project. They are trying to determine the required rate of return for their debt and equity holders. See the information below:

1. A 6.5% percent annual coupon bond with 15 years to maturity, selling for 96% of par. The bonds make annual payments. What is the before tax cost of debt? If the tax rate is 30%, what is the after-tax cost of debt?
2. The firm's beta is 1.5. The risk-free rate is 4.0% and the expected market return is 10%. What is the cost of equity using CAPM?

Large companies may usually obtain new capital by either issuing stocks or bonds.

1. What are the 2-3 most important favorable elements (pros) of stocks and 2-3 most favorable aspects of bonds to the issuer?
2. What are the 2-3 negative elements (cons) to consider when issuing stocks and 2-3 cons of issuing bonds?

Submission Guidelines

• Submit a PowerPoint presentation with five (5) slides, one for each of the numerical items listed above. Include an additional title slide and reference slide.
• Attach an Excel file if necessary, to support the calculations.
• Include at least two credible references in APA format.
• The CSU Global Library is a good place to find these references (available in the left-hand navigation panel).
• See the rubric below for full details on how you will be graded on this assignment.