BESC Finance Analysis Help With Solution
Please include at least 2 decimal spaces on all percentages.
Part 1 A
Bremond Equipment Supply Corporation (BESC) needs to determine its Weighted Average Cost of Capital in order to make a few capital budgeting decisions. The firm has already established the proporation of its capital. Use these proportions in calculating the firm’s WAAC.
Source of Capital
Common stock equity
Debt: BESC can sell a 15-year, semi-annual,$1,000 par value, 8.75 percent bond for $985. A flotation cost of 1.75 percent of the face value would be required in addition to the discount of $15.
Preferred Stock: BESC has determined it can issue preferred stock at $70 per share par value. The stock will pay an $8.00 annual dividend. The cost of issuing and selling the stock is $2 per share.
Common Stock: BESC’s common stock is currently selling for $39 per share. The dividend expected to be paid at the end of the coming year is $5.00. Its dividend payments have been growing at a constant rate for the last five years. Five years ago, the dividend was $3.50. It is expected that to sell, a new common stock issue must be underpriced at $4 per share and the firm must pay $1 per share in flotation costs. Additionally, the firm’s marginal tax rate is 40 percent.
To help determine the firm’s WACC, we will break this problem down into steps:
A. Calculate the rate for the new bond issue, notice is has semi-annual compounding.
B. Calculate the after-tax cost of the bond issue.
C. Calculate the cost of the new issue of preferred stock.
D. Calculate the growth rate of the common stock dividends.
E. Calculate the cost of the new common stock issue.
F. Finally, calculate the firm’s weighted average cost of capital assuming the firm has exhausted all retained earnings.
As with the previous assignment – you need to show me how you calculated your answers in order to get the full credit for the problems.
Part 1 B
Bremond Equipment Supply Corporation is now considering investment in two independent projects, A and C, which are described below. Please don’t assume anything. Use the firm’s WACC which you just calculated to evaluate the projects.
Cash Inflows (CF)
How it Works
How It works ?
Step 1:- Click on Submit your Assignment here or shown in left side corner of every page and fill the quotation form with all the details. In the comment section, please mention product code mentioned in end of every Q&A Page. You can also send us your details through our email id firstname.lastname@example.org with product code in the email body. Product code is essential to locate your questions so please mentioned that in your email or submit your quotes form comment section.
Step 2:- While filling submit your quotes form please fill all details like deadline date, expected budget, topic , your comments in addition to product code . The date is asked to provide deadline.
Step 3:- Once we received your assignments through submit your quotes form or email, we will review the Questions and notify our price through our email id. Kindly ensure that our email id email@example.com and firstname.lastname@example.org must not go into your spam folders. We request you to provide your expected budget as it will help us in negotiating with our experts.
Step 4:- Once you agreed with our price, kindly pay by clicking on Pay Now and please ensure that while entering your credit card details for making payment, it must be done correctly and address should be your credit card billing address. You can also request for invoice to our live chat representatives.
Step 5:- Once we received the payment we will notify through our email and will deliver the Q&A solution through mail as per agreed upon deadline.
Step 6:-You can also call us in our phone no. as given in the top of the home page or chat with our customer service representatives by clicking on chat now given in the bottom right corner.
Features for Assignment Help
We believe in providing no plagiarism work to the students. All are our works are unique and we provide Free Plagiarism report too on requests.
We believe in providing perfect, relevant and 100% accurate solutions to the student as per questions asked. All our experts are perfect in providing that so as to give unique experience to the students.
We are the only service providers boasting of providing original, relevant and accurate solutions. Our three stage quality process help students to get perfect solutions.
All our works are kept as confidential as we respect the integrity and privacy of our clients.
- Physics Assignment Help
- Chemistry Assignment Help
- Engineering Assignment Help
- Psychology Assignment Help
- Online exam Help
- Marketing Assignment Help
- Arts Assignment Help
- Sociology Assignment Help
- Project Management Assignment
- Case Study Help
- Nursing Assignment Help
- Research Assignment Help
- Operations Management Assignment help
- Accounting Assignment Help
- Biology Assignment Help
- Mathematics Assignment Help
- English Assignment Help
- Business Plan Help
- Essay Writing Help
- Human Resource Assignment Help
- Accounting Homework Help
- Computer Science Assignment Help
- Finance Assignment Help
- Economics Assignment Help
- Statistics Homework Help
- Management Assignment Help
- Strategy Management Assignment Help
- Auditing Assignment Help
- Information Management Assignment Help
- Online Assignment Writing help
- Best Assignment Help
- Humanities Assignment help
Do not cut and paste this chart into your excel spreadsheet. Something in the formatting causes excel to calculate it incorrectly!
A. Calculate Payback Period for both projects
B. Calculate NPV for both projects
C. Calculate PI for both projects
D. Calculate IRR for both projects
E. Which project should the firm accept? Why?
Another company is in the process of determining its WACC. For this problem you will need to use the CAPM to calculate your answer.
(This problem is completely independent of Part 1A and 1B, all the information you need is given to you in the question.)
The current risk-free rate is 2.5% and the market is expected to return 7.5% per year. The company’s beta is 2.1. The company expects to pay 6.0% for its debt. The target capital structure for the company is 55% equity and 45% debt. The marginal tax rate is 37%.
A. What is the after-tax cost of debt?
B. What is the cost of equity?
C. Calculate the WACC.
Product Code :Fin88
To get answer for this question, kindly click here (Note: Don’t forget to write the product code in comment section)
You can also email us at email@example.com but please mentioned product code in the mail body while sending emails.You can browse more questions to get answer in our Q&A sections here.