# We Helped With This Financial Calculations Homework: Have A Similar One?

SOLVED
Category Math Financial Calculations Undergraduate Solved Financial Accounting Assignment

## Short Assignment Requirements

Needs to be done in excel pleaseI Understand the concept but do not have the time to complete this assigmentthanks

## Assignment Description

Name: Jeronimo, Kevin

Instructions: Read carefully each question and show all your work or risk not receiving credit

Problem 1 (30 points)

S & P Corporation (SPC) has an optimal capital structure of 40 percent debt and 60 percent equity.  Given the following information, calculate the marginal cost of capital (MCC) schedule and the optimal capital budget. How much is the optimal capital budget and what is the corporate cost of capital?

5 years ago, the company issued callable bonds that pay semiannual payment with 5.5% annual coupon rate and sold them at par value (\$1,000). However, each bond is currently selling at \$1,040 and has 15 years remaining to maturity.

SPC’s current stock price is \$48.12, its long run growth rate is 4% and its expected earnings per share (EPS1) is \$4.00. The company retains 20% of its earnings to fund future growth.

There are 102.5 million common shares outstanding.

New common stock may be issued with 5 percent flotation costs.

SPC has the following Investment Opportunity Schedule(IOS):

 Project IRR Cost (millions) A 15.2% 20 B 12.5% 55 C 9.0% 45 D 7.5% 40 E 6.0% 50

Problem 2 (50 points)

S & P Corporation (SPC) is considering entering a new line of business.  In analyzing the potential business, the financial staff has accumulated the following information:

The new business will require a capital expenditure of \$7 million at t = 0.  This expenditure will be used to purchase new equipment.

This equipment will be depreciated according to MACRS five-year class (see table next page).

The equipment will have a salvage value of \$500,000 after five years.

If SPC goes ahead with the new business, inventories will rise by \$400,000 whereas accounts payable will rise by \$100,000 (both at t = 0). As a matter of fact, the required level of working capital is 7.5% of expected sales over the year:

WCt = 7.5%*Salest+1

The new business is expected to have an economic life of five years.

The Marketing Department forecasts to sell 300,000 units during the first year and then 400,000 units thereafter.  The expected price is \$10 per unit during the first year. Price must be adjusted by inflation in subsequent years.

During the first year, variable cost is expected to be \$5.50 per unit whereas fixed cost is \$100,000. These figures must be adjusted by inflation in subsequent years.

The new product is expected to increase before-tax cash flows of the company’s existing products by \$300,000 per year in real terms. This amount also has to be adjusted by inflation.

The expected inflation rate during the life of the project is 2% per year.

The company’s interest expense each year will be \$220,000.

The company’s tax rate is 40%.

The company is very profitable, so any accounting losses on this project can be used to reduce the company’s overall tax burden.

The company’s cost of capital (WACC) is 7.62%. However, the proposed project is riskier than the average project for SPC and therefore you have to add 2% to the corporate cost of capital.

The company’s CFO wants you to analyze the project and to write a short report with your recommendation.  Please be advised that the report will be read by both financial and non-financial managers, therefore, make sure you explain your calculations and recommendation.

MACRS 5-year class

Depreciation

### Year    Rates

1                                                      0.20

2                                                      0.32

3                                                      0.19

4                                                      0.12

5                                                      0.11

6                                                      0.06

Problem 3 (Problem 20 points).

Aggarwal Enterprises is considering a new project that has a cost of \$1,000,000, and the CFO set up the following simple decision tree to show its three most likely scenarios.  The firm could arrange with its work force and suppliers to cease operations at the end of Year 1 should it choose to do so, but to obtain this abandonment option, it would have to make a payment to those parties.  Calculate the project’s coefficient of variation.

WACC = 7.62%                   Dollars in Thousands                        t = 0      t = 1       t = 2                 t = 3

Prob. = 20%                                  \$800.0                   \$800.0           \$800.0

Prob. = 60%                      -\$1,000 \$520.0               \$520.0           \$520.0

Prob. = 20%                                 -\$200.0

## Frequently Asked Questions

Is it free to get my assignment evaluated?

Yes. No hidden fees. You pay for the solution only, and all the explanations about how to run it are included in the price. It takes up to 24 hours to get a quote from an expert. In some cases, we can help you faster if an expert is available, but you should always order in advance to avoid the risks. You can place a new order here.

How much does it cost?

The cost depends on many factors: how far away the deadline is, how hard/big the task is, if it is code only or a report, etc. We try to give rough estimates here, but it is just for orientation (in USD):

 Regular homework \$20 - \$150 Advanced homework \$100 - \$300 Group project or a report \$200 - \$500 Mid-term or final project \$200 - \$800 Live exam help \$100 - \$300 Full thesis \$1000 - \$3000

How do I pay?

Credit card or PayPal. You don't need to create/have a Payal account in order to pay by a credit card. Paypal offers you "buyer's protection" in case of any issues.

Why do I need to pay in advance?

We have no way to request money after we send you the solution. PayPal works as a middleman, which protects you in case of any disputes, so you should feel safe paying using PayPal.

Do you do essays?

No, unless it is a data analysis essay or report. This is because essays are very personal and it is easy to see when they are written by another person. This is not the case with math and programming.

Why there are no discounts?

It is because we don't want to lie - in such services no discount can be set in advance because we set the price knowing that there is a discount. For example, if we wanted to ask for \$100, we could tell that the price is \$200 and because you are special, we can do a 50% discount. It is the way all scam websites operate. We set honest prices instead, so there is no need for fake discounts.

Do you do live tutoring?

No, it is simply not how we operate. How often do you meet a great programmer who is also a great speaker? Rarely. It is why we encourage our experts to write down explanations instead of having a live call. It is often enough to get you started - analyzing and running the solutions is a big part of learning.

What happens if I am not satisfied with the solution?

Another expert will review the task, and if your claim is reasonable - we refund the payment and often block the freelancer from our platform. Because we are so harsh with our experts - the ones working with us are very trustworthy to deliver high-quality assignment solutions on time.

## Popular Solved Assignments Like This

Customer Feedback

"Thanks for explanations after the assignment was already completed... Emily is such a nice tutor! "

Order #13073

Find Us On