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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 of 700 words in Microsoft® Word.
Use Microsoft® Word tables in the presentation if you choose.
Show all calculations and analysis in the presentation.
Format your assignment consistent with APA guidelines.
Click the Assignment Files tab to submit your assignment.
Note: Grades are awarded based upon individual contributions to the
Learning Team assignment. Each Learning Team member receives a
grade based upon his/her contributions to the team assignment. Not all
students may receive the same grade for the team assignment.
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FIN 370 Week 5 Question and Problem Set (Ch18-Q3, Ch18-
Q11, Ch20-Q8, Ch20-Q14, Ch21-Q4, Ch21-Q7, Ch26-Q1,
Ch26-Q2)
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