The marks corporation has bonds in the market with the below

FIN 310 – Module 02 Written Assignment – Problems

Don't use plagiarized sources. Get Your Custom Essay on
The marks corporation has bonds in the market with the below
Just from $13/Page
Order Essay


Problem 1

The Marks Corporation has bonds in the market with the below characteristics.  If the company has a marginal tax rate of 35% what is its cost of debt?

Bond Characteristics:

Face Value:         $1,000

Coupon Rate:    8%

Frequency of payments:              Semi-annual

Years to maturity:            12

Current price of bonds: $925


Problem 2

The Bella Corporation has a beta of 1.4, the market risk premium is 8.2% and the risk-free rate is 2.5%.  What is Bella Corporation’s cost of equity?


Problem 3

The common stock of the Sleepy Time Company is currently selling for $42 per share.  The company expects to pay dividends of $2.00 per share in one year and projects a constant growth rate of 4%.  What is the cost of equity for the Sleepy Time Company?


Problem 4

The Up-and-Down company has a cost of equity of 12.2%, a cost of debt of 8.6%, and a marginal tax rate of 40%.  The current market value of its debt is $10 million and the current market value of its equity is $25 million. 

a) What is Up-and-Down’s weighted average cost of capital?

b) What would be the company’s WACC if the amount of debt used was $20 million and equity was $15 million?


Problem 5

The Clean-You-Out Car Wash Company company has projected next year’s activity as indicated below.  Calculate the company’s Operating Cash Flow.  (The company’s marginal tax rate is 35%.)

Next Year’s Projection:

                Year 1

Sales      $2,50,000

Cost of Goods Sold          $1,00,000

Administrative Expense                $20,000

Depreciation      $40,000


Interest Expense             $25,000

Place your order
(550 words)

Approximate price: $22

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:
The price is based on these factors:
Academic level
Number of pages
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

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more