In the Excel template, use the “Peter WACC” tab.  Peter Park…

In the Excel template, use the “Peter WACC” tab.  Peter Parker Industries manufactures a variety of superhero weapons. The company is considering introducing a new super-charged, solar-powered, disintegration ray gun.  The company’s CFO has collected the following information about the company for WACC calculation:  The company has a Beta of 1.2.  The risk free rate is 2.5% and the market risk premium is 8.5%.  The company has 100,000 shares outstanding with a current price of $8.50.  The company also has 10,000 shares of preferred stock outstanding with a dividend rate of 5.5% and a par value of $50.  It is currently trading for $45. The company’s cost of debt is 4.0%, and the 3,000 bonds with a par value of $1,000 that are currently trading for 100.5%.  The company’s tax rate is 21%. What is PP’s WACC?  Format:  XX.XX% with no leading 0’s.

Use the spreadsheet titled “Decision Rules” in your exam tem…

Use the spreadsheet titled “Decision Rules” in your exam template to complete this problem. You are trying to decide which assisted living facility you should buy based upon cash flows as follows (in millions): Project CF  0 CF  1 CF   2 CF   3 CF   4 Death Valley -$30 $15 $2 $4 $45 ReTire Flats -$15 $2 $2 $0 $40 Pass Away Lots -$10 $7 $4 $5 $6 Your cost of capital is 17%. In the Excel Template, use the tab called “Decision Rules”.  Calculate the NPV, IRR, and Profitability Index for each project.  You have a budget constraint of $50million.  Which project(s) should you choose and (briefly) why?

 (8 points)  You purchased bonds from Proctle and Gamptor fi…

 (8 points)  You purchased bonds from Proctle and Gamptor five years ago when they were issued at par.  These bonds originally had 30 years until maturity, a semi-annual coupon payment, a coupon rate of 6%, and a par value of $1,000.  You want to sell the bonds today, and the market rate is now 7%. What is the price at which you could sell these bonds?