Question: Instruction: • required to show your working process and discuss your findings in details.
• work in Excel. #3 report should be well-organized and typed in a Word file. I needboth Word report and Excel files
1: Mortgage Loan Analysis:
You plan to buy a house in Houston in May 2018. The sale price is $380,000. You need to pay 20% down payments and borrow additional 80% from bank of America with a traditional 30-year, 3.6% fixed-rate mortgage loan. You are expected to pay an equal MONTHLY payment starting from June 2018 for a total of 30 years.
(A) Calculate your expected monthly mortgage payment.
(B) Develop the 2018~2038 amortization table for your mortgage loan.
(C) When you prepare your 2018 tax filing, what is the total mortgage interest payment that you can consider for the tax deduction?
2: Capital Budgeting Analysis (60 points):
A firm is planning a new project that is projected to yield cash flows of - $395,000 in Year 1, $386,000 per year in Years 2 through 5, and $378,000 in Years 6 through 11. This investment will cost the company $1,580,000 today (initial outlay). We assume that the firm's cost of capital is 12.8%.
(A) Draw a time line to show the cash flows of the project.
(B) Compute the project's payback period, net present value (NPV), profitability index (PI), internal rate of return (IRR), and modified internal rate of return (MIRR).
(C) Discuss whether the project should be taken.
3: Weighted Average Cost of Capital (80 points)
Find 2017 financial statements for Costco (Ticker COST) from UHV Mergent Online database, Yahoo! Finance, Google Finance, or other financial data sources.
(A) Evaluate the company's financial situation (e.g., liquidity, leverage, profitability).
(A)Estimate the weights of capital (debt, preferred stock, and common stock) for the company.
(B) Estimate the before-tax and after-tax component cost of debt for the firm.
(C) Estimate the component cost of preferred stock (if applicable) for the firm.
(D) Estimate the component cost of common equity using CAPM for the firm.
(E) Compute the firm's weighted average cost of capital (WACC). Discuss your findings.