GF 520 Purdue Global Calculating Cost of Equity Debt & WACC Questions Assignment: Textbook Problems Complete the following Questions and Problems from the

GF 520 Purdue Global Calculating Cost of Equity Debt & WACC Questions Assignment: Textbook Problems
Complete the following Questions and Problems from the textbook:
● Chapter 13 – Problems 13-1, 13-2, 13-5, and 13-12, pages 422–423
You must show your work to receive credit for your answers. No credit will be given for the correct answer
alone. You should perform all calculations in Excel and paste them into the Word document using the “Paste
Special-Excel Worksheet Object” feature. This allows your instructor to double click on your work to see the
formulas and calculations you used to answer the selected problems. GF520: Corporate Finance | Unit 4 Assignment 1
Assignment: Textbook Problems
Complete the following Questions and Problems from the textbook:
●
Chapter 13 – Problems 13-1, 13-2, 13-5, and 13-12, pages 422–423
You must show your work to receive credit for your answers. No credit will be given for the correct answer
alone. You should perform all calculations in Excel and paste them into the Word document using the “Paste
Special-Excel Worksheet Object” feature. This allows your instructor to double click on your work to see the
formulas and calculations you used to answer the selected problems.
Once completed, submit your file, including a title page to the Unit 4 Assignment 1 Dropbox. Assignments are
due Tuesday 11:59 p.m. ET of their assigned unit.
GF520: Textbook Problems
Item criteria
Points are earned based on critical thinking, analysis, and correct and thorough
responses to the following:
Points
Possible
Chapter 13 – Problems 13-1, 13-2, 13-5, and 13-12
55
Grammar and Writing Style
5
Total Points
60
Points
Earned
Chapter 13
1. Calculating Cost of Equity
The Nixon Corporation’s common stock has a beta of .95. If the risk-free rate is 2.7 percent
and the expected return on the market is 10 percent, what is the company’s cost of equity
capital?
2. Calculating Cost of Debt
One Step, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding
with 17 years to maturity that is quoted at 95 percent of face value. The issue makes
semiannual payments and has a coupon rate of 6 percent. What is the company’s pretax cost
of debt? If the tax rate is 21 percent, what is the aftertax cost of debt?
5. Calculating WACC
Mullineaux Corporation has a target capital structure of 70 percent common stock and 30
percent debt. Its cost of equity is 10.9 percent and the cost of debt is 5.7 percent. The relevant
tax rate is 23 percent. What is the company’s WACC?
12. Finding the WACC
Titan Mining Corporation has 6.4 million shares of common stock outstanding and 175,000
6.2 percent semiannual bonds outstanding, par value $1,000 each. The common stock
currently sells for $53 per share and has a beta of 1.15; the bonds have 25 years to maturity
and sell for 106 percent of par. The market risk premium is 6.8 percent, T-bills are yielding
3.1 percent, and the company’s tax rate is 22 percent.
a. What is the firm’s market value capital structure?
b. If the company is evaluating a new investment project that has the same risk as the firm’s
typical project, what rate should the firm use to discount the project’s cash flows?

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