Corporate Finance Assignment/ Professional Essay Writers

You are required to rank the projects and recommend the “four best” that the company should accept. No other project characteristics are deciding factors in the selection, except that management has determined that projects 7 and 8 are mutually exclusive.

All projects require the same initial investment, $2,000,000. Moreover, all are believed to be of the same risk class.

1. What is the weighted average cost of capital of this company?

The following information is given as well :

Debt                                           10,000 shares of 6.5% coupon bonds are outstanding, $1,000 face value, 20 years to maturity, selling for 95 % of face value. The bonds make semiannual payments

COMMON STOCK              250,000 shares outstanding, selling for $60 per share, the beta is 1.05

Preferred stock                   10,000 shares of 5% preferred stock outstanding, $100 par value, currently selling for $93 per share.

Market                                      8% market risk premium and 4.5 % risk-free rate

Corporate tax rate = 35%.  Get Finance Help Today