1. What is the objective of investor-owned (for-profit) firms.
2. A financial analyst collected some data about a company, which has two sources of financing: debt (25%) and the equity (the rest). The firm’s bonds yield 7%, and the company’s tax rate is 35%. The risk-free rate is 1.50%, the market risk premium is 5%, and the stock’s beta is 0.8. Find the company’s WACC.
3. A stream of cash flows that pays $1000 every year for 10 year. The first cash flow is received at t=1 and you will receive additional $500 at the end of the 10 years. You have a discount rate of 10%