Reference no: EM132488323

This assignment will allow you to demonstrate the following objectives:

Question 1: Compute the net present value, profitability index, and internal rate of return for a given company.

Question 2:  Predict the best choice for a company based on analysis of financial data.

Question 3: Compute a company's WACC using given percentages.

Question 4: Calculate the cost of capital of a stock.

Question 5:  Computer the after-tax cost of capital for bonds.

Point 1. The capital structure for Mills Corporation is shown below. Currently, flotation costs are 13% of market value for a new bond issue and $3 per share for preferred stock. The dividends for common stock were $2.50 last year and have an estimated annual growth rate of 6%. Market prices are $1,050 for bonds, $20 for preferred stock, and $40 for common stock. Assume a 34% tax rate.

Financing Type % of Future Financing

Bonds (8%, $1k par, 16 year maturity) 36%

Common equity 45%

Preferred stock (5k shares outstanding, $50 par, $1.50 dividend) 19%

Total % 100%

Question 6: Compute the company's WACC.