FIN 370 Week 2 to 5 My finance Labs
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FIN 370 Week 2 MyFinance Lab
1). Templeton Extended Care Facilities, Inc is considering the acquisition of a chain of cemeteries for $390 million. Since the primary assets of this business is real estate, Templeton's management has determined that they will be able to borrow the majority of the money needed to buy the business. The current owners have no debt financing but Templeton plans to borrow $280 million and invest only $110 million in equity in the acquisition. What weights should Templeton use in computing the WAAC for this acquisition?
2). Compute the cost of capital for the firm for the following:
3). Your firm is considering a new investment proposal and would like to calculate its weighted average cost of capital. To help in this, compute the cost of capital for the firm for the following:
FIN 370 Week 3 MyFinanceLab
1. (Related to Checkpoint 4.2 on page 86) (Capital structure analysis) The liabilities and owners’ equity for Campbell Industries is found below:
2. If Campbell was to purchase a new warehouse for $1.1 million and finance it entirely with long term debt, what would be the firm’s new debt ratio?
2. The following table contains current asset and current liability balances for Deere and Company (DE): Measure the liquidity of Deere & Co. for each year using the company’s net working capital and current ratio. Is the trend in Deere’s liquidity improving over this period? Why or why not?
3. You just received a $4,000 bonus.
4. Break even analysis
2. The Marvel Mfg. Company is considering whether or not to construct a new robotic production facility. The cost of it is $582,000 and it’s expected to have a six year life with annual depreciation expense of $97,000 and no salvage value. Annual Sales from the new facility is expected 2,010 units with a price of $930 per unit. Variable production costs are $570 per unit while fixed cash expenses are $75,000 per year
5. Given the info below.
6. (Cash budget) The Sharpe Corporation’s projected sales for the first eight months of 2011 are as follows:
FIN 370 WEEK 4 MyFinanceLab
1. The target capital structure for Jowers Manufacturing is 50 percent common stock, 15 percent preferred stock, and 35 percent debt. If the cost of equity for the firm is 20 percent, the cost of preferred stock is 12 percent, and the before-tax cost of debt is 10 percent, what is Jower’s cost of capital? The firm’s marginal tax rate is 34 percent.
2. (Weighted average cost of capital) The target capital structure for QM Industries is 40 percent common stock, 10 percent preferred stock, and 50 percent debt. If the cost of equity for the firm is 18 percent, the cost of preferred stock is 10 percent, the before-tax cost of debt is 8 percent, and the firm's tax rate is 35 percent, what is QM's weighted average cost of capital?
3. Crypton electronics has a capital structure consisting of 41% common stock and 59% debt, a debt issue of 1000 par value, 6.4 bonds that matures in 15 years and pays an annual interest well sell for $973. Common stock of the firm is selling for 30.49 per share and the firm expects to pay a 2.24 dividend next year. Dividends have grown at the rate of 5.3% per year and expected to continue to do so for the foreseeable future. What is Cryptons cost of capital where the firms tax rate is 30%
4. As a member of the finance department of ranch manufacturing, your supervisor has asked you to compute the appropriate discount rate to use when evaluating the purchase of new packaging equipment for the plant under the assumption that the firms present capital structure reflects the appropriate mix of capital source for the firms, you have determined the market value of the firm’s capital structure as follows Bonds $4,500,000, preferred stock $2,300,000, common stock $ 6,200,000. To finance the purchase ranch manufacturing will sell 10 year bonds paying 6.9 % per year @ a market price of 1,055 .preferred stock paying $2.02 dividend can be sold for 25.37 common stock for ranch manufacturing is currently selling for 55.14 per share and the firm paid a 3.07 dividend last year. Dividend are expected to continue growing at a rate of 4.7 per year into the indefinite future , if the firms tax rate is 30% what discount rate should you use to evaluate the equipment purchased . Ranch manufacturing company WACC is _____________ round 3 decimal places.
5. Abe Forrester and three Of his friends from college have interested a group of venture capitalists in backing their. The proposed operation would consist of a series of retail outlets to?Distribute and service a full line of vacuum cleaners and accessories. These stores would?Be located in Dallas, Houston, and San Antonio. To finance the new venture two plans?Have been proposed:
FIN 370 Week 5, MyFinance Lab
1. Construct a delivery date profit or loss raph for a long position in a forward contract with a delivery price of $75.00. Analyze the profit or loss for values of the underlying asset ranging from $55 to $100 (I attached the graphs) a. Which of these graphs shows the correct profit/loss line for the long forward contract on delivery date T?