Question

Please remember to round your answer to two decimal places.

Problem 9-2 After-Tax Cost of Debt

LL Incorporated's currently outstanding 8% coupon bonds have a yield to maturity of 13%. LL believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 35%, what is LL's after-tax cost of debt? Round your answer to two decimal places.______ %

Problem 9-5 Cost of Equity: Dividend Growth

Summerdahl Resort's common stock is currently trading at $33.00 a share. The stock is expected to pay a dividend of $1.75 a share at the end of the year (D₁ = $1.75), and the dividend is expected to grow at a constant rate of 5% a year. What is the cost of common equity? Round your answer to two decimal places.________%

Problem 9-6 Cost of Equity: CAPM

Booher Book Stores has a beta of 1.2. The yield on a 3-month T-bill is 4.5% and the yield on a 10-year T-bond is 6.5%. The market risk premium is 6%, and the return on an average stock in the market last year was 12.5%. What is the estimated cost of common equity using the CAPM? Round your answer to two decimal places.____ %

Problem 9-8 WACC

David Ortiz Motors has a target capital structure of 40% debt and 60% equity. The yield to maturity on the company's outstanding bonds is 12%, and the company's tax rate is 40%. Ortiz's CFO has calculated the company's WACC as 11.29%. What is the company's cost of equity capital? Round your answer to two decimal places.______ %

Problem 10-01 NPV

A project has an initial cost of $45,125, expected net cash inflows of $10,000 per year for 9 years, and a cost of capital of 8%. What is the project's NPV? (Hint: Begin by constructing a time line.) Do not round your intermediate calculations. Round your answer to the nearest cent. $______

Problem 10-02 IRR

A project has an initial cost of $60,000, expected net cash inflows of $14,000 per year for 9 years, and a cost of capital of 12%. What is the project's IRR? Round your answer to two decimal places.________ %

Problem 10-03 MIRR

A project has an initial cost of $43,425, expected net cash inflows of $12,000 per year for 10 years, and a cost of capital of 8%. What is the project's MIRR? Do not round intermediate calculations. Round your answer to two decimal places.______%

Problem 10-04 Profitability Index

A project has an initial cost of $61,000, expected net cash inflows of $12,000 per year for 11 years, and a cost of capital of 9%. What is the project's PI? Do not round your intermediate calculations. Round your answer to two decimal places. ________

Problem 10-05 Payback

A project has an initial cost of $59,050, expected net cash inflows of $13,000 per year for 8 years, and a cost of capital of 13%. What is the project's payback period? Round your answer to two decimal places._______ years

Problem 10-06 Discounted Payback

A project has an initial cost of $60,000, expected net cash inflows of $14,000 per year for 7 years, and a cost of capital of 13%. What is the project's discounted payback period? Round your answer to two decimal places.________ years

Please remember to round your answer to two decimal places.

Answer 1

Answer 9-2 = After tax cost of debt = 8.45%

Reason -

After tax cost of debt = Yield to maturity * ( 1 - tax rate )

= 13% * ( 1 - 0.35 )

= 13% * 0.65

= 8.45%

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