Our Services

Get 15% Discount on your First Order

[rank_math_breadcrumb]

FIN 3301 Unit VIII

Financial Management

Unit VIII Assignment

This assignment will allow you to demonstrate the following objectives:

· Compute the net present value, profitability index, and internal rate of return for a given company.

· Predict the best choice for a company based on analysis of financial data.

· Compute a company’s WACC using given percentages.

· Calculate the cost of capital of a stock.

· Computer the after-tax cost of capital for bonds.

Instructions: Answer the questions directly on this document. When you are finished, select “Save As,” and save the document using this format: Student ID_UnitVIII. Upload this document to BlackBoard as a .doc, docx, or .rtf file. Show all of your work.

1. The Turnip Company plans to issue preferred stock. Currently, the company’s stock sells for $110. Once new stock is issued, the Turnip Company would receive only $90. The dividend rate is 8%, and the par value of the stock is $100. Compute the cost of capital of the stock to your firm. Show all work.

2. The Maximus Corporation is considering a new investment, which would be financed from debt. Maximus could sell new $1,000 par value bonds at a new price of $920. The bonds would mature in 13 years, and the coupon interest rate is 10%. Compute the after-tax cost of capital to Maximus for bonds, assuming a 34% tax rate. Show work.

3. Connor Corporation is considering two projects (see below). For your analysis, assume these projects are mutually exclusive with a required rate of return of 10%.

Project 1

Project 2

Initial investment

$(465,000)

$(700,000)

Cash inflow Year 1

$510,000

$850,000

Compute the following for each project:

· NPV (net present value)

· PI (profitability index)

· IRR (internal rate of return)

Based on your analysis, answer the following questions :

· Which is the best choice? Why?

· Which project should be selected and why? If the projects had the same IRR amounts but different NPV totals, then how would you know which project to select? Explain.

· What would happen if both projects had negative NPV totals? Which project would you choose? What do negative NPVs indicate? Explain.

· Should we also use the payback method to assist us in project selection? Why or why not? Explain.

4. The capital structure for Magellan Corporation is shown below. Currently, flotation costs are 13% of market value for a new bond issue and $3 per share for preferred stock. The dividends for common stock were $2.50 last year and have an estimated annual growth rate of 6%. Market prices are $1,020 for bonds, $20 for preferred stock, and $30 for common stock. Assume a 34% tax rate.

Financing Type

% of Future

Financing

Bonds (8%, $1k par, 16 year maturity)

36%

Common equity

45%

Preferred stock (5k shares outstanding, $50 par, $1.50 dividend)

19%

Total %

100%

Compute the company’s WACC. Is this WACC considered reasonable given the assumptions and other relevant information? Explain.

Share This Post

Email
WhatsApp
Facebook
Twitter
LinkedIn
Pinterest
Reddit

Order a Similar Paper and get 15% Discount on your First Order

Related Questions

Discussion Board 3 ( Healthcare Reimbursement)

In your post, compare the characteristics and claims filing processes of private and public payers. What type of ethical issues could arise with personnel during the claims filing processes? Imagine yourself sitting around a conference table with your instructor and classmates. This discussion topic will be similar. It is a

Reading 3

instructions and readings are attached  For section #2 Comparative Insight (7 points) I also attached week 2 reading (Staffing Models)

MATH120

SEE ATTACHMENT  Conditional Probability: What affect does a condition have on the probability?  Let’s compare and find out. Example:   Let’s look at a standard deck of 52 playing cards. No replacement:  What is the probability of getting 2 kings assuming that the first one is not replaced?  (Note:  There are

MGMT496

SEE ATTCHMENT 250-300 WORDS ANSWERING THE FOLLOWING QUESTION This week explain who the potential audience for your e-portfolio will be.  How will you ensure that your e-portfolio is well received by the audience?  What acronyms do you use in your workplace that can cause confusion?  If you are including a

Government and Politics

Details attached.   The role of government in the economy is often debated by economists and businesspeople. 

HRM 6302 Unit V DBR

2 Employment Law HRM 6302 Unit V DB Reply 1 Posts to others should be a minimum of 150 words and use at least one supporting reference. You can use the text for this course as one of the reference sources. Reply to student post below Part I Under the Federal

Fin 6301 Unit VI PPP

2 Corporate Finance ECO 6301 Unit VI PowerPoint Presentation This assignment measures your mastery of ULOs 5.1, 5.2, and 5.3. The purpose of this PowerPoint Presentation is to analyze fundamental aspects of corporate finance management in multinational corporations. You will research a multinational corporation to focus on for the assignment,

gender

 In this summarize, Gallant writes mostly about gender and sex work. How might her ideas be expanded to consider gender in other areas of life?  

Real Estate Evaluation| Neighborhood Analysis

Identify and evaluate the neighborhood within which you live? Create a neighborhood profile using internet links and personal information that will provide some specific data. Draw some inference from this evaluation. Be sure to understand the term neighborhood and what makes this neighborhood different. Is it close to jobs? How

week 3 dicussion Organizational Behavior

 What are the factors that influence our perception? What is the link between perception and decision making? How do individual differences and organizational constraints influence decision making? 

FIN 6301 Unit V DB R1

2 Corporate Finance ECO 6301 Unit V DB Reply 1 • Your response post to class classmate should be at least 150 words in length. • Your response post should include at least one APA-formatted scholarly, professional, or textbook reference with accompanying in-text citation to support any paraphrased, summarized, or

FIN 6301 Unit V DB R2

2 Corporate Finance ECO 6301 Unit V DB Reply 2 • Your response post to class classmate should be at least 150 words in length. • Your response post should include at least one APA-formatted scholarly, professional, or textbook reference with accompanying in-text citation to support any paraphrased, summarized, or

BUSINESS (NO PLAGARISM A+ WORK, ON TIME)

discussion and assignment ASSIGNMENT Brand Extension Assignment For this assignment, you are asked to choose an  existing brand and create a  brand extension for that brand. This is not connected to your final paper topic, so you can use any brand, including your final paper topic for this deliverable. Your goal is

Cash Budget

See attached Please complete Excel template provided The goal of this assignment is to demonstrate the process of construction and utilization of a cash budget for a company. The assignment is closely related to Course Objectives #02. For this assignment we consider the monthly cash budget for six months (January

Final Project: Present a Business Plan

   Final Project: Present a Business Plan WHO: You are the entrepreneur, and your job is to present a business plan for your entrepreneurial venture (I was thinking of a truck parking stop).

Deliverable 7 – Strategic Implementation of Quality Initiatives

  Competencies Analyze the history of healthcare quality improvement and how it shapes current and future quality initiatives. Evaluate patient care clinical outcomes using quality improvement principles. Evaluate healthcare quality measures and their use in diverse populations and settings. Apply models of quality improvement to institutional challenges within the healthcare

Week 4 Discussion Response- Account for Managment Decision Making

Account for Management Decision Making Week 4 Learning Resources Costs There are many different types of costs that impact a manager’s decision making. Therefore, it is imperative that managers understand what each type is as well as the ones relevant to a specific decision. In these resources, you will examine