***THIS MUST BE IN EXCEL***You are given the following information about a company. Their tax rate is 34%. The firm is in need of $5 million dollars in external funds. Your bond advisor suggests that new bond issues can be lower than the current yield to maturity by 2.0% . You are not sure he is correct. Should you issue the new debt to raise money?Existing capital structure:Debt: 5,000 Eight percent (8%) coupon bonds outstanding. The par value is $1000 and they mature in ten years. They are currently selling for $1250 and make semiannual payments. Equity: 50,000 shares outstanding. The common stock is currently selling for $72 per share. The beta for the company is 1.15.Preferred Stock: 10,000 shares of 2% preferred stock with a par value of $100, and is currently selling for $65.00 per shareMarket Information: The risk of the market is 6% and the risk-free rate is 2%. The industry debt-equity ratio is 33%. The flotation rate for new debt is 3% and for new equity it is 5%. 1) Calculate the existing weighted average cost of capital.2) New cost of capital if add 5M in new bonds. This assumes we sell enough bonds to realize 5M. Since the price will be net of flotation we need to sell them at 1000 but net a bit less.3) What if they finance the 5M with all equity? What would the capital structure and WACC look like?4) What if they add 5M in financing split among debt and equity in proportions equal to the current capital structure. What is the WACC?
Finance work in Excel
How to place an order?
Take a few steps to place an order on our site:
- Fill out the form and state the deadline.
- Calculate the price of your order and pay for it with your credit card.
- When the order is placed, we select a suitable writer to complete it based on your requirements.
- Stay in contact with the writer and discuss vital details of research.
- Download a preview of the research paper. Satisfied with the outcome? Press “Approve.”
Feel secure when using our service
It's important for every customer to feel safe. Thus, at Your homework help service, we take care of your security.
Financial security You can safely pay for your order using secure payment systems.
Personal security Any personal information about our customers is private. No other person can get access to it.
Academic security To deliver no-plagiarism samples, we use a specially-designed software to check every finished paper.
Web security This website is protected from illegal breaks. We constantly update our privacy management.
Get assistance with placing your order. Clarify any questions about our services. Contact our support team. They are available 24\7.
Still thinking about where to hire experienced authors and how to boost your grades? Place your order on our website and get help with any paper you need. We’ll meet your expectations.