FIN 370 Week 3 Question and Problem Sets

FIN 370 Week 3 Question and Problem Sets in $21 OnlyFIN 370 Week 3

Purpose of Assignment

Students should understand and be able to calculate the net present value and internal rate of return for corporate cash flows, determine project cash flows and a company’s sales, variable costs, fixed costs, and its breakeven point.

Assignment Steps 

Resources: Tutorial help on Excel® and Word® functions can be found on the Microsoft® Office website. There are also additional tutorials via the web that offer support for office products. 

Complete the following Questions and Problems from each chapter as indicated. 

FIN 370 Week 5 Problem 3

FIN 370 Week 5 Problem 3

A firm’s current balance sheet is as follows:

Assets $100                        Debt                               $10

Equity                             $90

a. What is the firm’s weighted-average cost of capital at various combinations of debt and equity, given the following information?

Debt/Assets          After-Tax Cost of Debt          Cost of Equity          Cost of Capital

0%                                                      8%                                             12%                                   ?

10                                                       8                                                 12                                     ?

20                                                       8                                                 12                                     ?

30                                                      8                                                 13                                      ?

40                                                      9                                                  14                                    ?

50                                                     10                                                15                                    ?

60                                                     12                                                16                                    ?

 

b. Construct a pro forma balance sheet that indicates the firm’s optimal capital structure. Compare this balance sheet with the firm’s current balance sheet.

What course of action should the firm take?

Assets                                 $100                       Debt                             $?

Equity                          $?

c. As a firm initially substitutes debt for equity financing, what happens to the cost of capital, and why?

d. If a firm uses too much debt financing, why does the cost of capital rise?

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Full Course FIN 370 Entire Class (Weeks 1-5) – Individual Assignments, DQs, LTAs, Final Exam

Full Course FIN 370 Entire Class (Weeks 1-5) – Individual Assignments, DQs, LTAs, Final Exam

Purchase FIN 370 Full Course + Final Exam

ENTIRE COURSE AVAILABLE

Price of Answer: Just US$ 27 only (Instant Download)

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Need Assistance…??  email us at care@solvemyquestion.com.

If you need any type of help regarding Homework, Assignments, Projects, Case study, Essay writing or any thing else then just email us at question@solvemyquestion.com.  We will get back to you ASAP. Do not forget to maintain the time frame you need you work to be done.

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