Reference no: EM132807932

Question 1: BAK Inc. has a market capitalization of $677 million and a market value of debt of $440 million. According to CAPM, BAK's cost of equity capital is 9.1% and BAK's outstanding bonds have an average yield of 5.1%. BAK's tax rate is 26%. What is BAK's weighted average cost of capital? Input your answer as a decimal rounded to 4 decimal places.

Question 2: BZ Inc's weighted average cost of capital is 6%. The company has a market capitalization of $858.2 million and carries debt of $367.2 million. BZ's beta is 1.1 and the tax rate it faces is 26%. The 10-year US Treasury Bond has a yield of 1.7% and the market risk premium is estimated to be 5.4%. What is the yield to maturity on BZ's outstanding debt? Report your answer as a decimal rounded to four decimal places.

Question 3: AGN Inc has a WACC of 5.7%, a cost of debt of 4.6% and a cost of equity of 7.2%. AGN's tax rate is 20%. What is AGN's capital structure weight of debt? Report your answer as a decimal rounded to 4 decimal places.

Question 4: Which of the following statements about sensitivity analysis is false?

option 1: Sensitivity analysis can be performed using a data table in Excel.

option 2: Sensitivity analysis investigates the impact of key valuation assumptions.

option 3: Sensitivity analysis is necessary because it is impossible to perfectly predict future results.

option 4: Sensitivity analysis utilizes the data validation tool in Excel.