Bergeron Systems is considering the following independent projects for the coming year: Project RequiredInvestment ExpectedRate of Return Risk X $2 million 12.5% High Y   6 million   8.0% Average Z   8 million   8.0% Low Bergeron’s WACC is 9.5 percent, but it adjusts for risk by adding 2 percent to the WACC for high-risk projects and subtracting 2 percent for low-risk projects.  Which project(s) should Bergeron accept assuming it faces no capital constraints?

Mike plans to retire in 19 years.  He currently has saved up $350,000, and he believes he will need $1,000,000 at retirement.  What annual interest rate must Mike earn to reach his goal, assuming he does not save any additional funds between now and retirement?

What is the present value of an annuity due that pays $2,000 per year for 4 years, assuming the annual discount rate is 7 percent?

An investment will pay $800 at the end of each of the next 5 years, $1,100 at the end of Year 6, and $1,300 at the end of Year 7.  What is its present value if other investments of equal risk earn 7 percent annually?

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: -$13,000 $5,500 $4,700 $4,000 $5,500 Calculate the project’s profitability index (PI).

The Fontenot Company’s cost of common equity is 13 percent, its before-tax cost of debt is 8 percent, and its marginal tax rate is 40 percent.  Given Fontenot’s market value capital structure below, calculate its WACC. Long-term debt $10,000,000 Common equity   20,000,000 Total capital $30,000,000

The last dividend paid by Klein Company was $1.00. Klein’s growth rate is expected to be a constant 5 percent for 2 years, after which dividends are expected to grow at a rate of 10 percent forever. Klein’s required rate of return on equity (rs) is 12 percent. What is the current price of Klein’s common stock?

An investment will pay $900 at the end of each of the next 3 years, $1,200 at the end of Year 4, and $1,000 at the end of Year 5.  What is its present value if other investments of equal risk earn 9 percent annually?

An annual coupon bond that matures in 20 years sells for $670.76.  It has a face value of $1,000 and a yield to maturity of 10.5 percent.  What is its current yield (CY)?

What is the present value of a perpetuity that pays $2,600 per year if the discount rate is 12.5 percent?