1.FlavR Co stock has a beta of 2.09, the current risk-free rate is 2.09 percent, and the expected return on the market is 9.09 percent. What is FlavR...
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1.     FlavR Co stock has a beta of 2.09, the current

risk-free rate is 2.09 percent, and the expected return on the market is 9.09 percent. What is FlavR Co's cost of equity?

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2.     Tom and Jerry's has 2.4 million shares of common stock outstanding, 2.4 million shares of preferred stock outstanding, and 14.00 thousand bonds. If the common shares are selling for $13.40 per share, the preferred share are selling for $10.40 per share, and the bonds are selling for 99.96 percent of par, what would be the weight used for equity in the computation of Tom and Jerry's WACC?

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3.     JackITs has 6.0 million shares of common stock outstanding, 2.0 million shares of preferred stock outstanding, and 30.00 thousand bonds. If the common shares are selling for $29.10 per share, the preferred share are selling for $14.50 per share, and the bonds are selling for 97.90 percent of par, what would be the weight used for equity in the computation of JackIT's WACC?

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4.     Your firm needs a machine which costs $170,000, and requires $32,000 in maintenance for each year of its 5 year life. After 3 years, this machine will be replaced. The machine falls into the MACRS 5-year class life category. Assume a tax rate of 30% and a discount rate of 16%. If this machine can be sold for $17,000 at the end of year 5, what is the after tax salvage value?

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5.     Your Company is considering a new project that will require $21,000 of new equipment at the start of the project. The equipment will have a depreciable life of 6 years and will be depreciated to a book value of $4,800 using straight-line depreciation. The cost of capital is 8%, and the firm's tax rate is 30%. Estimate the present value of the tax benefits from depreciation.

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6.     You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $150,000. The truck falls into the MACRS 5-year class, and it will be sold after 5 years for $15,000. Use of the truck will require an increase in NWC (spare parts inventory) of $4,500. The truck will have no effect on revenues, but it is expected to save the firm $66,000 per year in before-tax operating costs, mainly labor. The firm's marginal tax rate is 30 percent. What will the cash flows for this project be during year 2?

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