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A.Step 1: Subtract the flotation costs from the given market value (or price) of the bond. The flotation cost is a percentage. Then input the amount in the Price (Pr) cell below in Step 2.Step 2: Calculate the Cost of Debt (Note: Use the YIELD formula in Excel)Settlement (Think of Settlement as the beginning of the duration of the bond)Maturity (Think of Maturity as the end of the duration of the bond)Rate(Coupon Rate)Pr(The bonds price per $100 face value: You must move the decimal one place to the left when inputting the bond Price (Pr) in the YTM formula in Excel. So a bond worth $855 would be inputted as 85.5 in Excel).Redemption(Bonds Face Value Par Value or Fair Price; Note that is is $100 not $1000. You make the adjustments by multiplying the answer by 10.)Frequency(If Coupon payments are semiannual you input a 2. If they are annual then input a 1)Basis:(Always leave it blank)Yield to Maturity (Answer)Step 3: Find the After-Tax Cost of Debt:Step 4: Cost of Preferred Stock =Step 5: Cost of Common Equity=Step 6: Find the WACCWeightsCostsWeighted CostsBonds0.38Preferred Stock0.15New Common Stock0.47(ANSWER)B.Step 1: Cost of New Common Equity =Step 2: Find the WACCWeightsCostsWeighted CostsBonds0.38Preferred Stock0.15New Common Stock0.47(ANSWER)(please use excel formulas to calculate and round to 2 decimal places

0.380.150.470.380.150.47WEEK 3

A.

Step 1: Subtract the flotation costs from the given market value (or price) of the bond. The flotation cost is a percentage. Then input the amount in the Price (Pr) cell below in Step 2.

Step 2: Calculate the Cost of Debt (Note: Use the YIELD formula in Excel)

Settlement

(Think of Settlement as the beginning of the duration of the bond)

Maturity

(Think of Maturity as the end of the duration of the bond)

Rate

(Coupon Rate)

Pr

(The bonds price per $100 face value: You must move the decimal one place to the left when inputting the bond Price (Pr) in the YTM formula in Excel. So a bond worth $855 would be inputted as 85.5 in Excel).

Redemption

(Bonds Face Value Par Value or Fair Price; Note that is is $100 not $1000. You make the adjustments by multiplying the answer by 10.)

Frequency

(If Coupon payments are semiannual you input a 2. If they are annual then input a 1)

Basis:

(Always leave it blank)

Yield to Maturity (Answer)

Step 3: Find the After-Tax Cost of Debt:

Step 4: Cost of Preferred Stock =

Step 5: Cost of Common Equity=

Step 6: Find the WACC

Weights

Costs

Weighted Costs

Bonds

Preferred Stock

New Common Stock

(ANSWER)

B.

Step 1: Cost of New Common Equity =

Step 2: Find the WACC

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