Reference no: EM132376708

1. JackITs has 5.9 million shares of common stock outstanding, 1.9 million shares of preferred stock outstanding, and 29.00 thousand bonds. If the common shares are selling for $29.00 per share, the preferred share are selling for $14.40 per share, and the bonds are selling for 97.91 percent of par, what would be the weight used for equity in the computation of JackIT's WACC?

2. Your firm needs a machine which costs $210,000, and requires $36,000 in maintenance for each year of its 7 year life. After 3 years, this machine will be replaced. The machine falls into the MACRS 7-year class life category. Assume a tax rate of 40% and a discount rate of 15%. If this machine can be sold for $21,000 at the end of year 7, what is the after tax salvage value?

3. Our Company is considering a new project that will require $700,000 of new equipment at the start of the project. The equipment will have a depreciable life of 5 years and will be depreciated to a book value of $200,000 using straight-line depreciation. The cost of capital is 11%, and the firm's tax rate is 39%. Estimate the present value of the tax benefits from depreciation.