Assignment on cost of capital, finance, Other Engineering

Atlas Inc. is planning to invest in a 4-year project which has the same risk as
the firm’s existing assets and operations. The project requires a $150,000 initial investment and is expected to generate equal annual after-tax cash flows for the next 4 years. In consultation with investment bankers, Atlas expects to be able to issue new debt at par with a coupon rate of10% and to issue new preferred stock with a $3 per share dividend at $30 a share. The common stock of the company is currently selling for $25.00 a share. Atlas Inc. expects to pay a dividend of $1 per share next year. Market analysts foresee a growth in dividends in Atlas stock at a rate of 10% per year. Atlas’s marginal tax rate is 30%. If Atlas raises capital using 45% debt, 5% preferred stock, and 50% common stock, what is its cost of capital? If Atlas’s beta is 1.2, market risk premium is 7.5%, and the risk free rate is 5.0%, compute the discount rate the firm should use to evaluate this project? What is the minimum cash flow per year this project should generate over the next four years to be accepted by the company?
Posted Date: 2/5/2012 1:08:18 PM | Location : United States

Related Discussions:- Assignment on cost of capital, finance, Assignment Help, Ask Question on Assignment on cost of capital, finance, Get Answer, Expert's Help, Assignment on cost of capital, finance Discussions

Write discussion on Assignment on cost of capital, finance
Your posts are moderated
Related Questions
Suppose you borrow $10,000 at 10% and you are going to make monthly payments of $2,500. How long until you pay off the loan?

Two readings i.e., 1.64m, and 0.73m, were taken during leveling procedure to define the slope of centerline of a bridge at points A, and B. If distance AB = 50m, find the slope of

A gating system is usually made up of :                         (i) Pouring basin                                          (ii) Sprue well                         (iii) Ru

Depreciation Methods Technically speaking, U.S. tax law permits deduction from taxable income of a reasonable allowance for wear or tear, natural decay or decline, exhaustion,

We now have some idea about what models are available to simulate the flow over an aerofoil, and also how to use the Hanley package to apply these methods. Keep referring to you

False Alarms & CM  The mis-association of false alarms with target tracks has two main e!ects.  - It tends to increase the actual tracking errors in the system because

Income statement: Sosa Corporation recently reported an EBITDA of $31.3 million and $9.7 million of net income. The company has $6.8 million interest expense, and the corporate tax

how to make patch antenna for wifi applicatoin

List three advantages and three disadvantages of open office spaces.

i have a project to do a remote control car by wired and the car should go foreword and backward by increasing the speed from the joystick(1) and the sound joystick control the dir