Question 1 | 1 / 1 point |

Garden Tools Inc. has bonds, preferred stock, and common stocks outstanding. The number of securities outstanding, the current market price, and the required rate of return for these securities are stated in the table below. The firm’s tax rate is 35%.

Calculate the firm’s WACC adjusted for taxes using the market information in the table.

*Round the answers to two decimal places in percentage form. **(Write the percentage sign in the “units” box)*

The Number of Securities Outstanding | Selling price | The Required Rate of Return | |

Bonds | 1,407 | $1,191 | 11.18% |

Preferred Stocks | 5,418 | $54.71 | 16.81% |

Common Stocks | 1,383 | $66.58 | 12.81% |

Question 2 | 1 / 1 point |

Tall Trees, Inc. is using the net present value (NPV) when evaluating projects. You have to find the NPV for the company’s project, assuming the company’s cost of capital is 8.42 percent. The initial outlay for the project is $307,089. The project will produce the following after-tax cash inflows of

Year 1: 126,050

Year 2: 91,170

Year 3: 28,946

Year 4: 194,652

*Round the answer to two decimal places.*

Question 3 | 1 / 1 point |

What is the yield to call of a 30-year to maturity bond that pays a coupon rate of 10.65 percent per year, has a $1,000 par value, and is currently priced at $945? The bond can be called back in 4 years at a call price $1,086. Assume annual coupon payments.

*Round the answer to two decimal places in percentage form.** **(Write the percentage sign in the “units” box)*

**You should use Excel or financial calculator.**

Question 4 | 1 / 1 point |

Find the modified internal rate of return (MIRR) for the following series of future cash flows if the company is able to reinvest cash flows received from the project at an annual rate of 11.87 percent.The initial outlay is $390,200.

Year 1: $158,700

Year 2: $164,600

Year 3: $167,700

Year 4: $133,700

Year 5: $184,100

*Round the answer to two decimal places in percentage form.** **(Write the percentage sign in the “units” box)*

Cost of new equity Gordon Model |

Question 5 | 1 / 1 point |

Calculate the cost of new common equity financing of stock R using Gordon Model

*Round the answers to two decimal places in percentage form. **(Write the percentage sign in the “units” box)*

** **

Last Year Dividend | Growth Rate of Dividends | Selling Price of Stock | Floatation Costs | Cost of Common Equity | |

Stock R | $2.82 | 2.8% | $67.38 | $2.50 | ? |

.

Yield to Maturity of bond, annually |

Question 6 | 1 / 1 point |

What is the yield to maturity of a 29-year bond that pays a coupon rate of 12.61 percent per year, has a $1,000 par value, and is currently priced at $1,417? Assume annual coupon payments.

*Round the answers to two decimal places in percentage form.** **(Write the percentage sign in the “units” box)**.*

**You should use Excel or financial calculator.**

Value of preferred stock, expected rate of return on preferred stock, Required rate of return using CAPM |

Question 7 | 1 / 1 point |

Giant Co. has just issued preferred stock with a par value of $100 and an annual dividend rate of 9.08 percent. If your required rate of return is 8.34 percent, how much will you be willing to pay for one share of this preferred stock?

*Round the answer to two decimal places.*

Payback period, discounted payback period |

Question 8 | 1 / 1 point |

Find the Discounted Payback period for the following project. The discount rate is 10%

Project X | |

Initial Outlay | $17,559 |

Year 1 | $5,049 |

Year 2 | $5,966 |

Year 3 | $5,776 |

Year 4 | $8,719 |

**Round the answer to two decimal places.**

Value (price) of bond, annually |

Question 9 | 1 / 1 point |

Fresh Water, Inc. sold an issue of 18-year $1,000 par value bonds to the public. The bonds have a 9.22 percent coupon rate and pay interest annually. The current market rate of interest on the Fresh Water, Inc. bonds is 8.25 percent. What is the current market price of the bonds?

*Round the answer to two decimal places.*

Yield to Maturity of bond, semi-annually |

Question 10 | 1 / 1 point |

A few years ago, Spider Web, Inc. issued bonds with a 11.42 percent annual coupon rate, paid semiannually. The bonds have a par value of $1,000, a current price of $742, and will mature in 22 years. What would the annual yield to maturity be on the bond if you purchased the bond today?

*Round the answer to two decimal places in percentage form.** **(Write the percentage sign in the “units” box)*

**You should use Excel or financial calculator.**

IRR |

Question 11 | 1 / 1 point |

Find the internal rate of return (IRR) for the following series of future cash flows. The initial outlay is $744,700.

Year 1: 180,700

Year 2: 179,900

Year 3: 143,100

Year 4: 188,800

Year 5: 145,700

*Round the answer to two decimal places in percentage form.** **(Write the percentage sign in the “units” box)*

**You should use Excel or financial calculator.**

Management of Current Assets |

Question 12 | 1 / 1 point |

Cheesburger and Taco Company purchases 17,596 boxes of cheese each year. It costs $28 to place and ship each order and $6.80 per year for each box held as inventory. The company is using Economic Order Quantity model in placing the orders.

How many orders will be placed each year? *Round the answer to the whole number*

Value (price) of zero-coupon bond, semi-annually |