Discounted Cash Flows and WACC Homework Problems\t\u00a0\tPlease post the answers (and show your work) in the assignments section by midnight the last day of the week assigned.\t\u00a0\t\u00a0\t\t\tCalculate the future value of 1,535 invested today for 8 years at 6 percent.\t(5 points)\t\u00a0\t\t\tWhat is the total present value of the following cash stream, discounted at 8 percent? (5 points)\t\u00a0\t \ufffd \ufffd Year \ufffd \ufffd \ufffd\u00a0 Amount\t1 \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd 400\t2 \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd 750\t3 \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd 945\t4 \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd 145\t5 \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd 78\t\u00a0\t3.\u00a0 If you invested $2,000 per year into an IRA for 30 years and received 6 percent return each year, what would the account balance be in 30 years? (5 points)\t\u00a0\t4. A friend gives you a proposition.\u00a0 If you give him 1,500 dollars today, he will guarantee your receive 12 percent a year for the next 5 years.\u00a0 How much money will you receive from him at the end of 5 years? (5 points)\t\u00a0\t5. You want to buy a new Computer Aided Design (CAD) system for your business.\u00a0 The cost of the system is $150,000 and you expect to save over $40,000 per year in reduced labor costs.\u00a0 Please calculate the net present value of the CAD if your required return is 10 percent and the life of the system is expected to be 5 years. (10 points)\t\u00a0\t6.\u00a0 Your company is considering converting its heating system in the main office from coal to heating oil.\u00a0 The initial cost of removing the coal fired furnace and installing an new oil fired unit is $60,000.\u00a0 The life of the analysis is 7 years.\u00a0 In the past you spent $25,000 per year on coal.\u00a0 The new company says you will spend no more than $15,000 per year on heating oil.\u00a0 If your required return is 12 percent, should you make this investment?\u00a0 Please calculate the net present value of this project. (10 points)\t\u00a0\t7.\u00a0\u00a0 You have collected the following information:\t\u00a0\ta.\u00a0 the yield on your company’s preferred stock\u00a0\u00a0\u00a0 8%\tb.\u00a0 the yield on your company’s debt\u00a0\u00a0 10%\tc.\u00a0 the required return on your company’s common stock and internal equity\u00a0 12%\td.\u00a0 debt total\u00a0 $5,000,000\te.\u00a0 preferred stock current market value\u00a0 $10,000,000\tf.\u00a0 common stock and retained earnings total value\u00a0 $20,000,000\t\u00a0\tPlease calculate the pre-tax weighted average cost of capital (WACC) for your company.\t(10 points)\t\u00a0\t8.\u00a0 Your company’s marginal income tax rate is 40%.\u00a0 Please calculate the post tax WACC from the information provided in problem 7.\u00a0 (10 points)<\/p>\n","protected":false},"excerpt":{"rendered":"
Discounted Cash Flows and WACC Homework Problems \u00a0 Please post the answers (and show your work) in the assignments section by midnight the last day of the week assigned. \u00a0 \u00a0 Calculate the future value of 1,535 invested today for Read More …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-216991","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/216991","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=216991"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/216991\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=216991"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=216991"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=216991"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}