Posted: June 15th, 2022

SUNY Buffalo MGF 301 The total book value of WTC’s equity is $50 million and book

1. The total book value of WTC’s equity is $50 million and book value per share excellent is $10. The inventory of WTC is at present promoting for a worth of $75 per share and the beta of WTC is 1.15. The bonds of WTC have a face value of $62 million and promote at a worth of 110 p.c of face value. The yield to maturity on the bonds is 5.5 p.c and the firm’s tax price is 35 p.c. If the E(Rm) = eight% and Rf = 1%, calculate the WACC of WTC.2. Suppose the corporate in #1 is contemplating the next growth tasks. How would you calculate therequired price of return to make use of within the NPV Assessment of the next: Clarify.(a) The firm is contemplating an growth to double the manufacturing of its present product. The firm will concern both equity or debt (however not each) to pay for the growth. (b) The firm is contemplating including a brand new product in a distinct line of enterprise that is unrelated to their present product.three. One yr in the past, an American investor purchased 1000 shares of London Bridges at a worth of £34 (or 34 UK kilos) per share when the trade price was $1.four/1£ (or $1.40 dollars = 1 pound). The investor additionally invested three,000,000 Japanese Yen in a cash market fund in Japan final yr when the trade price was 110 Yen = $ 1 US.(a) Utilizing present trade charges, what is today’s value of the investor’s portfolio in U.S. dollars if the UK funding decreased 20% (in native forex) and the Japan funding elevated 2% (in native forex)? (b) What is the general price of return on the portfolio over the past yr?four. An American agency is evaluating an funding in Mexico. The mission would require buying tools from a range of sources and delivery it to Mexico. The projected price of shopping for the tools and delivery it is $2.2 million. As soon as the mission begins operations, it is anticipated to final for five years (assume straight line depreciation). Anticipated gross sales are $1,900,000 every year within the U.S. and the prices of the mission are projected to be 5 million pesos every year for the 5 years. If taxes are 35%, the suitable low cost price is 9% and you employ the present trade price for pesos:(a) Calculate the NPV in U.S. dollars. (Present all calculations and ignore working capital)(b) Calculate the NPV in Mexican pesos. (Present all calculations and ignore working capital)

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