Finance Assignment | Top Essay Writing

The Financial controller of “Grizzlies Corporation” is about to select among three available projects. He was provided the following information:
how to prepare balance sheet from trial balance
Project
Rate of return
X
7.50%
Y
7.80%
Z
7.30%
The company can acquire it’s capital from a combination of debt for $1,400,000 and preferred stocks for $600,000.
• The corporation estimates that it can issue Bonds at a coupon rate of 10 percent, and the YTM will be 9 percent.
• The company is in the 40 percent tax bracket.
• The company can issue preferred stock at $75 per share, which pays a constant dividend of $6.75 per year.
Questions 11→15 refers to Case Three.
11. The weights of debt and preferred equity are respectively:
A.$2,000,000
B.70% ; 30%
C.40% ; 60%
D.100%
12. The cost of preferred stock is:
A.$75.00
B.9.00%
C.$81.75
D.11.09%
13. The after tax cost of debt is:
A.6.00%
B.5.40%
C.10.00%
D.9.00%
14. The Weighted Average Cost of Capital is:
A.14.40%
B.7.20%
C.6.48%
D.100%
15. The project(s) that can be accepted by the company is(are):
A.Only Y
B.Only X
C.None of them
D.All of them.