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The Herron Company’s cost of common equity is 13 percent, its before-tax cost of debt is 10 percent, and its marginal tax rate is 30 percent.  Given Herron’s market value capital structure below, calculate its WACC. Long-term debt $29,000,000 Common equity   51,000,000 Total capital $80,000,000

An investment will pay $900 at the end of each of the next 4 years, $800 at the end of Year 5, and $600 at the end of Year 6.  What is its present value if other investments of equal risk earn 9 percent annually?

Martinez Motors’ bonds have 6 years remaining to maturity.  Interest is paid annually; they have a $1,000 par value; the coupon interest rate is 7 percent; and the yield to maturity is 5 percent.  What is the bond’s current market price?

A share of common stock just paid a dividend of $1.00. If the expected long-run growth rate for this stock is 5.4%, and if investors’ required rate of return is 11.4%, what is the stock price?

What is the present value of a perpetuity that pays $2,400 per year if the discount rate is 9 percent?

A firm with a 10 percent cost of capital is considering a project for this year’s capital budget.  The project’s expected after-tax cash flows are as follows: Year: 0 1 2 3 4 Cash flow: -$12,000 $5,400 $5,600 $4,100 $5,000 Calculate the project’s discounted payback period.

What is the present value of a security that will pay $16,000 in 15 years if securities of equal risk pay 14 percent annually?

An investment will pay $600 at the end of each of the next 2 years, $500 at the end of Year 3, and $600 at the end of Year 4.  What is its present value if other investments of equal risk earn 9 percent annually?

What is the present value of an annuity due that pays $4,200 per year for 9 years, assuming the annual discount rate is 11 percent?

Brooks Books’ bonds have 6 years remaining to maturity.  Interest is paid annually; they have a $1,000 par value; the coupon interest rate is 9 percent; and the yield to maturity is 6.5 percent.  What is the bond’s current market price?