# Corporate Investment and Finance

FratBro23
Category:
Price: \$25 USD

Question description

1. The market value of Charter Cruise Company's equity is \$25 million, and the market value of its risk-free debt is \$10 million. If the required rate of return on the equity is 12% and that on the debt is 7%, calculate the company's cost of capital. (Assume no taxes.)
2. The market value of Charcoal Corporation's common stock is \$40 million, and the market value of its risk-free debt is \$15 million. The beta of the company's common stock is 1.45, and the market risk premium is 6%. If the Treasury bill rate is 4%, what is the company's cost of capital? (Assume no taxes.)
3. The market value of XYZ Corporation's common stock is \$140 million and the market value of the risk-free debt is \$160 million. The beta of the company's common stock is 0.65, and the expected market risk premium is 5.5%. If the risk free rate  4%, what is the firm's cost of capital? (Assume no taxes.)
4. You are given the following data for year-1. Revenue = \$80; Cash operating cost (excluding depreciation expense) = \$53; Depreciation = \$13; Tax rate = 40%. Calculate the operating cash flow for the project for year-1.
5. You are given the following data for year-1: Revenues = \$350, Fixed costs excluding depreciation = \$130; Total variable costs = 50% of revenues; Depreciation = \$40; Tax rate = 30%. Calculate the after tax cash flow for the project for year-1.
6. A project has the following cash flows: C0= -200,000; C1= 77,000; C2= 115,000; C3= 120,000. If the discount rate changes from 10% to 12%, what is the change in the NPV of the project (approximately)?
7. You have three stocks in your portfolio as follows:                                                                                                                                            Amount                            Beta

Investment A  100,000                              .7

Investment B  300,000                           1.05

Investment C    50,000                         1.45

What is the portfolio beta?

(Top Tutor) Daniel C.
(997)
School: Boston College
Studypool has helped 1,244,100 students

1819 tutors are online

Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors