A firm with a 13 percent cost of capital is evaluating two projects for this year’s capital budget.  The projects’ expected after-tax cash flows are as follows: Year: 0 1 2 3 Project X: -$9,000 $4,300 $3,900 $3,000 Project Y: -$11,000 $5,100 $4,800 $5,000 If Projects X and Y are mutually exclusive, which one(s) should the firm adopt?

A firm with a 9.5 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: -$15,000 $6,200 $6,800 $5,400 $6,800 Calculate the project’s internal rate of return (IRR).

Loyd & Associates’ common stock currently trades at $55 a share.  It is expected to pay an annual dividend of $3.30 a share at the end of the year (D1 = $3.30), and the constant growth rate is 4.3 percent a year.  What is the company’s cost of common equity if all of its equity comes from retained earnings?

A firm with a 12.5 percent cost of capital is evaluating two projects for this year’s capital budget.  The projects’ expected after-tax cash flows are as follows: Year: 0 1 2 3 Project X: -$10,000 $4,900 $4,300 $5,500 Project Y: -$7,000 $2,900 $3,600 $3,700 If Projects X and Y are mutually exclusive, which one(s) should the firm adopt?

The Fontenot Company’s cost of common equity is 11 percent, its before-tax cost of debt is 7 percent, and its marginal tax rate is 25 percent.  Given Fontenot’s market value capital structure below, calculate its WACC. Long-term debt $  4,000,000 Common equity   6,000,000 Total capital $10,000,000

A firm with a 12 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: -$15,000 $6,900 $6,600 $5,600 $7,200 Calculate the project’s payback period.

A firm with a 12 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: -$15,000 $6,900 $6,600 $5,600 $7,200 Calculate the project’s payback period.

Kiev Corporation’s outstanding bonds have a $1,000 par value, a 12 percent semiannual coupon, 19 years to maturity, and an 8.5 percent yield to maturity (YTM).  What is the bond’s price?

Moerdyk Company’s stock has a beta of 1.40, the risk-free rate is 4.25%, and the market risk premium is 5.50%. What is the firm’s required rate of return?

The Schenk Company’s currently outstanding bonds have a 7.6 percent coupon and a 9.5 percent yield to maturity.  Schenk believes it could issue new bonds that would provide a similar yield to maturity.  If its marginal tax rate is 30 percent, what is Schenk’s after-tax cost of debt?