Reference no: EM132509991

1. Hannibal Corp. has a cost of equity of 12%, and an after-tax cost of debt of 7%. Using market values, Hannibal's debt is 40% of the value of the firm and its equity is 60% of the value of the firm. What is the weighted average cost of capital?

2. Dexter Corp. can borrow at 9% and is has a 23% marginal tax rate. What is the after-tax cost of debt?

3. Columbia Corporation has a beta of 1.6, the risk-free rate is expected to be 3.5% and the market risk premium is expected to be 5.5%. Using the Capital Asset Pricing Model, what is the after-tax cost of equity?

4. Quincy Corp. expects NOPLAT of $3,800,000 in the first year after the forecast period (or the first year of continuing value period. In addition, it expects growth of 2.5% during the continuing value period, and a weighted average cost of capital of 7%. Please calculate the continuing value.

5. St Louis Corp. expects free cash flows of $2,000,000, $3,200,000, $4,400,000, $5,800,000, $6,500,000, in years 1,2 3,4, 5, respectively. In addition, it has a continuing value of $20,000,000 at the end of year 5 and a cost of capital of 7%. Assuming year end cash flows and that these are all the cash flows for the company, what is the value of this company?

6. Perryville Corp. has an enterprise value of $50,000,000, long term debt of $8,000,000, and an under-funded pension obligation of $6,000,000. If it has 1,800,000 shares outstanding (and no shares under option), please compute the intrinsic value per common share.