This is a multipart question, can you please show the work on how you did the problems.
1. Cost of Debt: 30 year Bonds Current Price 101.5% of par value 7.6 % Coupon Rate Semi Annual Bond 5 years to maturity Tax Rate: 40% What is the Cost of Debt? After Tax?
2. Preferred Stock: Dividend $7.50 Current Price $60.00 What is the Cost of Preferred?
3. Equity: Risk Free Rate 6.50% Market Risk Premium 6.25% Stock Beta 0.7 What is the Cost of Equity?
4. Market Value...Debt/Equity 10,000 Bonds Outstanding Selling @ 101.5% of Par Value 43,000 Preferred Stock @ $60.00 300,000 Shares of Common Stock @ $40.00 per share
5. What is the WACC?
6. Given the WACC calculation the NPV for the following capital budget investment $400,000 cash flows: 1st year -55,000, 2nd year 65,000, 3rd year 75,000, 4th year 85,000, 5th year 150,000 (Accept or Reject the project?)
7. NPV is ?
8. Calculate payback