Practice_FinalExam_Solutions

Practice_FinalExam_Solutions - Problem 2 Input Area: Land...

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Problem 2 Input Area: Land price $3,000,000 Land appraisal $9,600,000 Plant cost $15,000,000 Debt Bonds outstanding 15,000 Settlement date 01/01/05 Maturity date 01/01/20 Annual coupon rate 7.00% Coupons per year 2 Face value (% of par) 100 Bond price (% of par) 92 Common stock Shares outstanding 300,000 Beta 1.30 Share price $75.00 Preferred stock outstanding Shares outstanding 20,000 Coupon rate 5.00% Share price $72.00 Market Market risk premium 8.00% Risk-free rate 5.00% Equity floatation cost 9.00% Preferred floatation cost 7.00% Debt floatation cost 4.00% Tax rate 35% Net working capital $900,000 Does the NWC require floatation costs (Yes/No) No b. Adjustment factor 2% c. Life of plant (years) 5 Life of project (years) 5
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Plant salvage value $5,000,000 d. Annual fixed costs $400,000 Variable costs per RDS $9,000 # RDS manufactured 12,000 Sale price per RDS $10,000 Output Area: Market value of debt $13,800,000 Market value of equity $22,500,000 Market value of preferred $1,440,000
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This homework help was uploaded on 02/20/2009 for the course H ADM 225 taught by Professor Jwellman during the Fall '07 term at Cornell.

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Practice_FinalExam_Solutions - Problem 2 Input Area: Land...

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