Question 1 As assistant to the CFO of Boulder, Inc., you must estimate the Year...
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Accounting
Question 1
As assistant to the CFO of Boulder, Inc., you must estimate the Year 1 cash flow for a project with the following information. What is the Year 1 cash flow? [Do not round your intermediate calculations].
Sales revenues $13,100
Depreciation $ 4,000
Other operating costs $ 6,000
R&D expenses $ 2,000
Tax rate 35.0%
Round your final answer to the nearest whole dollar amount.
Question 2
Anderson Systems is considering a project that has the following cash flow and WACC data. What is the project's IRR? Note that if a project's projected IRR is less than the WACC, it should be rejected.
WACC: 11%. Cash flows: Year 0= -$1,000; Year 1 = $500 Year 2 = $500, Year 3 = $500, Year 4 = $500
Round your final answer to two decimal places (answer should be in percentage).
Question 3
You were hired as a consultant to Algoma Company, whose target capital structure is 35% debt, 15% preferred, and 50% common equity. The after-tax cost of debt is 6.25%, the cost of preferred is 7.50%, and the cost of retained earnings is 13.75%. The firm will not be issuing any new stock. What is its WACC?
Round your final answer to two decimal places (in percentage form).
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