Your rm is considering a new investment proposal and would like to calculate its….

2.) Your ?rm is considering a new investment proposal and would like to calculate its weighted average cost of capital. To help in this, compute the cost of capital ?rm following:a. A bond that has a $1,000 par value (face value) and a contract or coupon interest rate of 11.2 percent that is paid semiarmually. The bond is currently selling price of $1,120 and will mature in 10 years. The ?rm’s tax rate is 34 percent.b. If the ?rm’s bonds are not ?equently traded, how would you go about determining a cost of debt company?c. A new common stock issue that paid a $1.72 dividend last year. The par value of the stock is $15, and the ?rm’s dividends per share have grown at a rate of 7.4 percent per year. This growth rate is expected to continue into the foreseeable future. The price of this stock is now $28.34.d. A preferred stock paying a 10.2 percent dividend on a $121 par value. The preferred shares are currently selling for $145.92.e. A bond selling to yield 13.8 percent purchaser of the bond. The borrowing ?rm faces a tax rate of 34 percent.3.)(Individual or component costs of capital) Compute the cost of capital ?rm following:a. Currently bonds with a similar credit rating and maturity as the ?rm’s outstanding debt are selling to yield 7.52 percent while the borrowing ?rm’s corporate tax rate is 34 percent.b. Common stock ?rm that paid a $1.03 dividend last year. The dividends are expected to grow at a rate of 4.6 percent per year into the foreseeable future. The price of this stock is now $24.17.c. A bond that has a $1,000 par value and a coupon interest rate of 12.5 percent with interest paid semiannually. A new issue would sell for $1,152 per bond and mature in 20 years. The ?rm’s tax rate is 34 percent.d. A preferred stock paying a dividend of 6.9 percent on a $102 par value. If a new issue is o?ered, the shares would sell for $83.22 per share.4.)(Related to Checkpoint 15.2) (EBIT-EPS analysis) Abe Forrester and three of his ?iends ?’om college have interested a group of venture capitalists in backing their business idea. The proposed operation would consist of a series of retail outlets to distribute and service a full line of vacuum cleaners and accessories. These stores would be located in Dallas, Houston, and San Antonio. To ?nance the new venture two plans have been proposed~ Plan A is an all-common-equity structure in which $2.4 million dollars would be raised by selling 82,000 shares of common stock.~ Plan B would involve issuing $1.2 million in long-term bonds with an effective interest rate of 11.7 percent plus another $1.2 million would be raised by selling 41,000 shares of common stock. The debt funds raised under Plan B have no ?xed maturity date, in that this amount of ?nancial leverage is considered a permanent part of the ?rm’s capital structure. Abe and his partners plan to use a 35 percent tax rate in their analysis, and they have hired you on a consulting basis to do the following:a. Find the EBIT indifference level associated with the two ?nancing plans.b. Prepare a pro forma income statement EBIT level solved part a that shows that EPS will be the same regardless whether Plan A or B is chosen.7.)(Net present value calculation) Big Steve’s, makers of swizzle sticks, is considering the purchase of a new plastic stamping machine. This investment requires an outlay of $105,000 and will generate net cash in?ows of $20,000 per year years.a. What is the project’s NPV using a discount rate of 7 percent? Should the project be accepted? Why or why not?b. What is the project’s NPV using a discount rate of 13 percent? Should the project be accepted? Why or why not?c. What is this project’s internal rate of return? Should the project be accepted? Why or why not?