Reference no: EM133059617
-We are evaluating a project that costs $984,000, has a 9-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 109,568 units per year. Price per unit is $57, variable cost per unit is $31, and fixed costs are $921,000 per year. The tax rate is 37%, and we require a 12 % return on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/-14 percent. What is the financial break-even quantity?
-Information on Commonwealth Power Co. is shown below. Assume the company's tax rate is 32%.Debt: 4,500 8% coupon bonds outstanding, $1,000 par value, 18 years to maturity, selling for 101% of par; the bonds make semiannual payments.
Common Stock: 112,500 shares outstanding, selling for $61 per share; the beta is 1.21.
Market: 11.5% market risk premium and 5% risk-free rate.
What is Commonwealth's WACC?
The Gold Oil Co. wants to issue new 17-year bonds for some much-needed expansion projects. The company currently has 10.3% coupon bonds on the market that sell for $1,201, make semiannual payments, and mature in 17 years. The company should set what coupon rate on its new bonds if it wants them to sell at par? In other words, what is the pre-tax cost of debt to be used in the analysis of the expansion project?
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Six month risk-free rate
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What is commonwealth wacc
: -We are evaluating a project that costs $984,000, has a 9-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life o
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