Grand Furniture has debentures in issue that mature in 13 years, have a 6 % coupon, and pay interest annually. These debentures have a face value of $1,000 and a current market price of $1,040. What is the company's after-tax cost of debt if its tax rate is 32 %?

The Bakery is considering a new project it considers to be a little riskier than its current operations. Thus, management has decided to add an additional 1.5 % to the company's overall cost of capital when evaluating this project. The project has an initial cash outlay of $62,000 and projected cash inflows of $17,000 in year one, $28,000 in year two, and $30,000 in year three. The firm uses 25 % debt and 75 % ordinary shares as its capital structure. The company's cost of equity is 15.5 % while the after-tax cost of debt for the firm is 6.1 %.  

B: What is the projected net present value of the new project? 

The Bakery is considering a new project it considers to be a little riskier than its current operations. Thus, management has decided to add an additional 1.5 % to the company's overall cost of capital when evaluating this project. The project has an initial cash outlay of $62,000 and projected cash inflows of $17,000 in year one, $28,000 in year two, and $30,000 in year three. The firm uses 25 % debt and 75 % ordinary shares as its capital structure. The company's cost of equity is 15.5 % while the after-tax cost of debt for the firm is 6.1 %.

A: What is the correct cost of capital to use to discount the cashflows?

Gold Bank has non-redeemable preference shares in issue with a $5 dividend that just sold on the market for $92 per share. What is the bank's cost of preference?

The Street Sheet's ordinary shares has a beta of 1.2. The risk-free rate is 3.5 % and the expected return on the market is 13 %. What is the firm's cost of equity?

The ordinary shares of Metal Moulds has a negative growth rate of 1.5 % and a required return of 18 %. The current share price is $11.40. What was the amount of the last dividend paid?

Jungle Pty Ltd. has a target debt-equity ratio of 0.72. Its WACC is 11.5 % and the tax rate is 34 %. What is the cost of equity if the after-tax cost of debt is 5.5 %?

Decker's is a chain of furniture retail stores. Furniture Fashions is a furniture maker and a supplier to Decker's. Decker's has a beta of 1.38 as compared to Furniture Fashion's beta of 1.12. The risk-free rate of return is 3.5 % and the market risk premium is 8 %. What discount rate should Decker's use if it considers a project that involves the manufacturing of furniture?  

Chelsea Fashions is expected to pay an annual dividend of $0.80 a share next year. The market price of the share is $22.40 and the growth rate is 5 %. What is the firm's cost of equity?

Lic Pools sells outdoor swimming pools and currently has an after-tax cost of capital of 11.6 %. Al's Construction builds and sells water features and fountains and has an after-tax cost of capital of 10.8 %. Lic Pools is considering building and selling its own water features and fountains. The sales manager of Lic Pools estimates that the water features and fountains would produce 20 % of the firm's future total sales. The initial cash outlay for this project would be $85,000. The expected net cash inflows are $16,000 a year for 7 years. What is the net present value of the Lic Pools project?