Part 2: Quantitative ProblemsDo not answer more than 5 probl…

Part 2: Quantitative ProblemsDo not answer more than 5 problem questions (only the first 5 questions will be counted).All non-MC quantitative questions require showing your work for full credit all answers must be legible to receive credit. Partial credit is awarded.All rate problems must be carried a minimum of 5 decimal places and final answers must be in % form.Round all final answers for $ problems to the nearest cent.

Teall Development Company hired you as a consultant to help…

Teall Development Company hired you as a consultant to help them estimate its cost of capital. You have been provided with the following data: D1= $1.45; P0 = $28.00; and g = 6.50% (constant). Based on the DCF approach, what is the cost of equity from retained earnings?

A firm’s debt has a par value of $1,000,000.  The market val…

A firm’s debt has a par value of $1,000,000.  The market value of this debt is $1,100,000. The coupon rate is 7% and the debt has 8 years left to maturity. Interest is paid annually. The tax rate is 40%. There are 100,000 shares of stock outstanding with a par value of $20 per share. The per share stock price is $25. What should be the approximate debt ratio for this firm?

Last month, Lloyd’s Systems analyzed the project whose cash…

Last month, Lloyd’s Systems analyzed the project whose cash flows are shown below. However, before the decision to accept or reject the project, the Federal Reserve took actions that changed interest rates and therefore the firm’s WACC. The Fed’s action did not affect the forecasted cash flows. By how much did the change in the WACC affect the project’s forecasted NPV? Note that a project’s projected NPV can be negative, in which case it should be rejected.  Old WACC: 10.00% New WACC: 8.00% Year 0     1   2   3   Cash flows -$1,000 $410 $410 $410