PROF SCRIPT – Risk and Return, Cost of Capital, and Dividend Policy

  
Part 1 of Assignment – 
Assignment Steps 
Resources: Tutorial help on Excel® and Word functions can be found on the Microsoft® Office website. There are also additional tutorials via the web that offer support for office products. 
Scenario: Wilson Corporation (not real) has a targeted capital structure of 40% long term debt and 60% common stock. The debt is yielding 6% and the corporate tax rate is 35%. The common stock is trading at $50 per share and next year’s dividend is $2.50 per share that is growing by 4% per year.
Prepare a minimum 700-word analysis including the following:

Calculate the company’s      weighted average cost of capital. Use the dividend discount model.       Show calculations in Microsoft® Word.
The company’s CEO has stated if      the company increases the amount of long term debt so the capital      structure will be 60% debt and 40% equity, this will lower its WACC.      Explain and defend why you agree or disagree. Report how you would advise      the CEO. 

Format your paper consistent with APA guidelines.
Part 2 of assignment – 
Answer each question with Knowledge and 100+ words answers. If citing please show references. 
1 – What are the differences between systematic and nonsystematic risk?
2- Cost of Capital – I have to admit when I started facilitating this class I had never heard of the WACC formula before. But now that it’s been awhile it really surprises how much I utilize this for projects at work. Had you ever heard of the WACC formula previously? 
3 – Using Net Present Value – How would you go about estimating the Net Present Value (NPV) of a college education by estimating the future earning with and without a college education. Please show an example. What is the relationship between Net Present Value (NPV) and Profitability Index (PI)?
4 – How do increases in debt affect the weighted average cost of capital?
5 – How does dividend policy affect the growth of a firm?
6 – What are some of the other ways that a company can diversify its business?
Part 3 of assignment – 
Scenario: You work for an investment banking firm and have been asked by management of Vestor Corporation (not real), a software development company, to calculate its weighted average cost of capital, to use in evaluating a new company investment. The firm is considering a new investment in a warehousing facility, which it believes will generate an internal rate of return of 11.5%. The market value of Vestor’s capital structure is as follows: 
  
Source   of Capital

Market   Value
 
Bonds

$10,000,000
 
Preferred   Stock

$2,000,000
 
Common   Stock

$8,000,000
To finance the investment, Vestor has issued 20 year bonds with a $1,000 par value, 6% coupon rate and at a market price of $950. Preferred stock paying a $2.50 annual dividend was sold for $25 per share. Common stock of Vestor is currently selling for $50 per share and has a Beta of 1.2. The firm’s tax rate is 34%. The expected market return of the S&P 500 is 13% and the 10-Year Treasury note is currently yielding 3.5%. 
Determine what discount rate (WACC) Vestor should use to evaluate the warehousing facility project. 
Assess whether Vestor should make the warehouse investment.
Prepare your analysis in a minimum 100+ words in Microsoft® Word.
   ��}���

Order a unique copy of this paper
(550 words)

Approximate price: $22

Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

At Solution Essays, we are determined to deliver high-quality papers to our clients at a fair price. To ensure this happens effectively, we have developed 5 beneficial guarantees. This guarantees will ensure you enjoy using our website which is secure and easy to use.

Money-back guarantee

Most companies do not offer a money-back guarantee but with Solution Essays, it’s either a quality paper or your money back. Our customers are assured of high-quality papers and thus there are very rare cases of refund requests due to quality concern.

Read more

Zero-plagiarism guarantee

All our papers are written from scratch and according to your specific paper instructions. This minimizes any chance of plagiarism. The papers are also passed through a plagiarism-detecting software thus ruling out any chance of plagiarism.

Read more

Free-revision policy

We offer free revisions in all orders delivered as long as there is no alteration in the initial order instruction. We will revise your paper until you are fully satisfied with the order delivered to you.

Read more

Privacy policy

All data on our website is stored as per international data protection rules. This ensures that any personal data you share with us is stored safely. We never share your personal data with third parties without your consent.

Read more

Fair-cooperation guarantee

Ordering and sending money to us is an indication that you are purchasing our products and services. To have business talks laid out in the official language, you can check on our terms and conditions and get more information about this.

Read more

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Order your essay today and save 20% with the discount code: LEMONADEPlace Order