Question: Will give u a like/ thumbs up for sure! Thank you so much! Friendly request and reminder:- pls answer all parts as I don't want
Will give u a like/ thumbs up for sure! Thank you so much!
Friendly request and reminder:- pls answer all parts as I don't want to waste the uploaded question. If u can't or don't want to answer all parts - pls don't answer {which further results in a dislike and bad comment :( }
Question -
A)
1. You just borrowed $150,000 and the annual interest rate on the loan is 3.5%. Assume you plan to repay the loan with 8 annual payments of equal amounts. What is your annual payment amount?
2.
2.1 A company's cost of debt capital:
Multiple Choice- choose which one is correct
- Can be calculated by looking at the coupon rates on existing bonds of similar risk.
- Can be calculated by estimating the beta of the firm's equity and then using the SML.
- Can be estimated by finding the yield on recently-issued bonds with lower bond ratings.
- Is the return that the firm's creditors demand for new borrowings.
- Can be observed directly even if the firm's bonds are not publicly traded.
2.2 A compay's weighted average cost of capital is applicable to projects that:
Multiple Choice - choose which one is correct
- Payback within the required period of time.
- Are similar in risk to the current operations of the firm.
- Are considered within one year of the date of the information used in the WACC computation.
- Represent new avenues of business for the firm.
- Are pure plays in new areas of business.
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
