A) because that is they only one that actually makes sense
Answer:
The price she sold the bond is $1,001.47
Explanation:
The formula for yield return in given as ;
Yield to maturity= (Annual interest+ per value - market price ÷ numbers of years to maturity)/per value+ market price÷ 2
048 = (Selling price + [(.07 × $1,000)/2] - $989)/$989
Making selling price the subject of formula we have this as the abswer
Selling price = $1,001.47
The better Project is Project S having a NPV of $17.968 and IRR of 12.10 %
IRR:
- An approach to capital budgeting that is used to assess the profitability of a project is the discounted payback time. Internal rate of return is one of these capital planning strategies (IRR).
- This rate of return corresponds to the point at which a project's net present value equals zero. Since it does not account for any outside forces, such as inflation, they call it internal.
The calculator's capabilities will be utilized to determine the IRR,
Project S
- CF0 = (1,000)
- CF1 = 882.62 & F01 = 1
- CF2 = 250 & F02 = 1
- CF3 = 15 & F03 = 1
- CF4 = 5 & F04 = 1
- I = 10.5%
- [NPV] [CPT]
- The NPV is $17.968
- [IRR] [CPT]
- The IRR will come as 12.10%
- Project L
- CF0 = (1,000)
- CF1 = 0 & F01 = 1
- CF2 = 260 & F02 = 1
- CF3 = 420 & F03 = 1
- CF4 = 732.87 & F04 = 1
- I = 10.5%
- [NPV] [CPT]
- The NPV is $15.78
- [IRR] [CPT]
- The IRR will come as 11.03%
- The better Project is Project S having a NPV of $17.968 and IRR of 12.10%
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Answer:
Ford's weighted average cost of capital is 8.22 %
Explanation:
Weighted Average Cost of Capital (WACC) is the minimum return that the company expect from a project. It shows the risk of the company.
Calculation of WACC
WACC = Cost of equity + Cost of preferred stock + Cost of debt
Capital Source Market Values Weight Cost Total Cost
equity $ 7 billion 29.17% 13.6% 3.97 %
preferred stock $ 2 billion 8.33% 12% 1.00 %
debt $ 15 billion 62.50% 5.2 % 3.25%
Total $ 24 billion 8.22 %
Cost of equity = Risk free rate + Beta × Risk Premium
= 4% + 1.2 × 8%
= 13.6%
Cost of preferred stock = Dividend/Market Price
= $ 3/ $ 25 × 100
= 12%
Cost of debt = interest × (1- tax rate)
= 8% × (1-0.35)
= 5.2 %
