Description of the Assignment:
Refer to what your instructor wants you to do and/or to submit, as detailed below in the Deliverables section. Include the real-world (authentic) situation, type of task to be accomplished, and the sorts of higher-order thinking (analysis, reasoning, critical thinking, etc.) that were requested and/or shared throughout your course thus far.
Topics Covered Include:
Weighted Average Cost of Capital
Valuation of Equity using the Capital Asset Pricing Model
Book Value of Debt
Capital Budgeting Technique of Net Present Value
Time Value of Money (Discounting)
BACKGROUND OF THE PROBLEM:
Long-term Debt consists of one outstanding bond issue with a face value of $75 million dollars, an 8 percent coupon rate and it sells for 93 percent of par.
ANSWER THE FOLLOWING in 4 pages (be sure to see paper requirements below for more expectations)
What is the cost of equity using the CAPM?
What is the cost of debt using Book Valuation?
What is the capital structure of the organization using book values?
What is the weighted Average Cost of Capital (WACC)?
What is the Net Present Value of the proposed Project?
Should the company purchase this project using your computed data? Explain.
What literature article supports Net Present Value over IRR or Payback?
Papers need to be formatted in proper APA 6th Edition style.
Each paper requires a minimum of at least three outside peer-reviewed sources for your references.