Corporate Finance

Question 1 Coxner Industries Berhad has an expected Earnings Before Interest and Taxes (EBIT) of $420,000 in perpetuity and a tax rate of 35 percent. The firm has $70,000 in outstanding debt at an interest rate of 8 percent and its unlevered cost of equity is 15 percent. Compute the Weighted Average Cost of Capital (WACC) of the levered firm with and without tax. Question 2 MH Berhad has expected earnings before interest and taxes of $8,100. The unlevered cost of capital is 11 percen...

QUESTION 1: Fuji Software, Inc. has the following mutually exclusive projects. Year Project A Project B 0 -$15,000 -$18,000 1 9,500 10,500 2 6,000 7,000 3 2,400 6,000 a) Suppose Fuji’s payback period cutoff is two years. Which of these projects should be choosen? b) Suppose Fuji uses the NPV rule to rank these two projects. Which project should be choosen if the appropriate discount rate is 15%? QUESTION 2: An investment project has annual cash inflows of $5,000, $5,500, $6,000 and...