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

Business Finance – Management Week 9 Assignment- Managerial Finance

Module 3 Assignment: Capital Budget Decision Making for an Organization Report prepared by: Replace this text with your name. Date: Replace this text with the submission date. Walden University MBAX 6070: Managerial Finance 1 Executive Summary Replace this text with your executive summary. Part 1: Short-Term Working Capital Considerations Replace

Logistics

see attached  BUSI 615 Integrated Learning Project Assignment Instructions Overview The integrated learning assignment is a series of 6 assignments and a final course consolidated submission. All assignments and the compilation of the final consolidated submission is managed as an individual assignment. Purpose The purpose of the ILP is for

HRM 6304 Unit I DB

2 Labor Relations and Collective Bargaining HRM 6304 Unit I Discussion Board In your opinion, does having two different existing labor federations (i.e., American Federation of Labor and Congress of Industrial Organizations [AFL-CIO] and Change to Win) strengthen or weaken the ability of organized labor to represent the interests of

Which of the following is a topic of macroeconomics?

 Which of the following is a topic of macroeconomics? A) why nations have different rates of growth B) what causes inflation and what can be done about it C) why unemployment periodically reaches very high levels D) all of the above

Business Finance – Management Week 9 Assignment- Delivery of Healthcare

Delivery of Healthcare Week 9 Assignment Improvement Plan- Part 2 This week, you should continue your Improvement Plan: Part 2. As you work on your Improvement Plan, be sure to incorporate peer-review feedback (as appropriate). This week, focus on the areas of: · Information technology (value-based care model) · Be

Business Finance – Accounting Assignment Week 2

 Tax Research using Code and Administrative Sources. Facts: You are a slightly over-confident  CPA who advises Changling Industries, LLC, a Florida Manager Managed  LLC a small start up limited liability that has garnered the attention  of several Angel Financing organizations. The founder, Nodan Idiote, of  middle-eastern origin and three of

Ecosystems

   Do you think the introduction of non-native species to an ecosystem always pose a threat to that ecosystem? 

Innovative and Strategic Thinking

Market entry, discussing details.  Market Entry The Impact of Innovation The graduate identifies the impact of innovation in personal and professional settings. Techniques of Strategic Management The graduate utilizes evidence-based techniques to make strategic decisions. Business Strategy and Analysis The graduate applies appropriate business practices to formulate recommendations that impact

Week 3 pj

 wood-based shipping container and a plastic-based shipping  Instructions:  You are going to compare and contrast the advantages and disadvantages of a paper- based shipping container, a wood-based shipping container and a plastic-based shipping container for use as a distribution package (a non-retail shipping package). You must consider the entire supply chain in

Week 3 MGMT618

 Workplace scenario involving an observed unethical  Assignment Directions This assignment assesses  CO-3 [content page].  Students will provide a workplace scenario involving an observed unethical practice. Submission Instructions: Write a 5–7 page report analyzing the situation, evaluating potential responses, and recommending the most ethically sound course of action. Requirements: Use at least

A22- Discussion

 Additionally, you will explore the concept of Relationship Marketing and, in particular, you will focus on Differentiating Customers by Their Needs. Please answer these questions and use scholarly support for your answers: 

Week 8

 building blocks from the business model canvas where modification  Assignment Directions: Goal: Conduct/construct an experiential evaluation/assessment of your organization’s business model (or one with which you are closely familiar) using the business model canvas and related text. Introduction: Managers who want to improve the effectiveness of their business model and

SEMCO Case study 1.0

Please see rubric, instruction and questions for the assignment that needs to be address attached. BMAL 710 Disorganization at Semco Case Study Assignment Instructions Overview Please read the Integrative Case 1.0 in Daft text and respond to all four questions at the end of the case study. Instructions Please make

Unit VIII

see attached Assignment Instructions Tactical financing decisions are essential as they guide a company’s immediate financial strategies. They encompass the decisions about how a company obtains and uses funds in the short term. In this journal entry, you will dive deep into a real-world example, analyzing a company’s recent tactical

cw2

the company for the work is Trader Joe’s entering the uk market files below with details  6MK509 Marketing Across Cultures CW2 Fit to Submit General: • 2,000 words (+/- 10%) Report format. • Do you have a good hierarchy of information (cover page, table of contents, headings, subheadings that have

Governance Review Presentation Using AI Insights

  Read the case study, “Zest: A Driving Force in Motors” concerning the strategic direction of Zest, particularly in terms of product diversification and market expansion.  For this assignment, you will develop a governance plan presentation for key stakeholders based on a real business case and AI tools like PMI

Assignment 1 689

Webinars are an effective way to obtain on-demand information regarding issues and challenges that leaders face. This assignment is designed to help students learn about various resources available for professional development, as well as engage in the thoughtful examination of pertinent leadership topics. After you have listened to your chosen