# Finance homework help

Anonymous

Question description

Two companies, TimCo., Inc. and MitCo., Inc. have the identical cost for each individual element of their capital. Calculate the overall WACC for each company and analysis why there is a difference in the WACC.

 TimCo, Inc. Type of Capital Book Value Cost Long-Term Debt \$500,000 6.20% Common Stock Equity \$400,000 15.00% Preferred Stock \$75,000 13.00% MitCo, Inc. Type of Capital Book Value Cost Long-Term Debt \$450,000 6.20% Common Stock Equity \$500,000 15.00% Preferred Stock \$60,000 13.00%

Calculate the payback period, NPV, and IRR for a firm with a 9% cost of capital on a project costing \$125,000 with a six-year life based on the following information:

 Year Cash Inflow 1 \$35,000 2 \$30,000 3 \$32,000 4 \$25,000 5 \$22,000 6 \$20,000

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