# Video Debt Excel Online Structured Activity: WACC Estimation On January 1, the total market value of the Tysse and company was $60 million, During the year, the company plans to raise and Invest $30 million in new projects. The firm's present market value capital structure, shown below, is considered to be optimal. Assume that there is no short-term debt. $30,000,000 Common equity 30,000,000 Total capital $60,000,000 New bonds will have an o coupon rate, and they will be sold at pac common stock is currently selling at $30 a share. The stockholders' required rate of return is estimated to be 12%, consisting of a didend yield of 4 and an expected constant growth rate of 8% (The next expected dividend is $1.20,0 $1.20/$30 = 4%.) The marginal corporate tax rates 404 The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the regulred analysis to answer the question below. Open spreadsheet In order to maintain the present capital structure, how much of the new Investment must be financed by common equity Enter your answer in dollars for comple, 112 million should be entered as $1200000. Round your answer to the nearest dollar. Do not round Intermediate calculations $ a. Assuming there is suivent cash now such that Tysserand can maintain is target capital structure without issuing additional shores of equiry, what is the WACC Hound your answer to two decimal places Do not found lotermediate calculations Support now that there is not enough internal cash flow and the firm must issue new shores of stock. Qualitatively speaking, wae wat happen to the WACCI Total capital 560,000,000 New bonds will have an 6 coupon rate, and they will be sold at par. Common stock is currently selling at $30 a share. The stockholders required rate of retum is estimated to be 12%, cornisting of a dividend yield of 4% and an expected constant growth rate of 8. (The next expected dividend is $1.20,0 $1.20/530 = 4%) The marginal corporate tax rate is 40% The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. Open spreadsheet In order to maintain the present capital structure, how much of the new Investment must be financed by common equity? Enter your answer in dollars. For example, $12 milion should be entered as 51200000. Round your answer to the nearest dollar. Do not round Intermediate calculations 5 6. Assuming there is suchent cash flow such that Tysseland can maintain ts target capital structure without issuing additional shares of equity, what is its WACC Round your answer to two decimal places. Do not round Intermediate calculations c Supore now that there is not enough internal cash flow and the nem must see new waves of stock. Clarvey speaking, what will happen to the WACC? Lincrease and the WACC wil deres due to the nation costs of new equ 11. wil decrease and the WACC will increase due to the flotation costs of new equity 111. and the WACC will not be affected by flotation costs of new equity IV. 1, and the WACC increase due to the flotation costs of new equity V. and the WACC we decrease due to the notation costs of new equity Check My Work Res Problem "" Arial > B 3 il 10 B17 E F G H C D WACC Equation 1 2 3 4 5 Market value of debt Market value of common equity Total market value $30,000,000 30,000,000 $60,000,000 6 7 New project investment $30,000,000 8 9 Coupon rate of of par value bonds 6.00% 10 Price of common stock $30.00 11 Required return of common stock, 12.00% 12 Dividend yield, DJP 4.00% 13 Constant growth rate, o 8.00% 14 Tax rato 40.00% 15 16 Amount of new investment financed with common equity 17 WACC, assuming no new common equity 18 19 20 21 22 23 24 Formulas #NA #N/A