Kuhn co. is considering a new project that will require an initial investment of $45 million. it has a target capital structure of 45% debt, 4% preferred stock, and 51% common equity. kuhn has noncallable bonds outstanding that mature in 15 years with a face value of $1,000, an annual coupon rate of 11%, and a market price of $1555.38. the yield on the company’s current bonds is a good approximation of the yield on any new bonds that it issues. the company can sell shares of preferred stock that pay an annual dividend of $9 at a price of $95.70 per share. you can assume that jordan does not incur any flotation costs when issuing debt and preferred stock.

kuhn does not have any retained earnings available to finance this project, so the firm will have to issue new common stock to fund it. its common stock is currently selling for $33.35 per share, and its expected to pay a dividend of $1.36 at the end of the year. flotation costs will represent 3% of the funds raised by issuing new common stock. the company is projected to grow at a constant rate of 9.2%, and they face a tax rate of 40%. determine what kuhn company's wacc will be for this project.

a. 8.65%

b. 7.79%

c. 8.22%

d. 6.92%

Jamie lee is reviewing her finances one month later. she has provided the actual amounts paid below. use the cash budget table below to her identify the variances in her budget. each answer must have a value for the assignment to be complete. enter "0" for any unused categories. actual amounts income: monthly expenses: gross monthly salary $2,315 rent obligation $260 net monthly salary $1,740 utilities/electricity $130 savings allocation: utilities/water $10 regular savings $130 utilities/cable tv $155 rainy-day savings $20 food $160 entertainment: gas/maintenance $205 cake decorating class $90 credit card payment $25 movies with friends $50 car insurance $75 clothing $145 budgeted amounts assets: monthly expenses: checking account $1,850 rent obligation $225 emergency fund savings account $4,300 utilities/electricity $75 car $5,200 utilities/water $35 computer & ipad $1,100 utilities/cable tv $120 liabilities: food $115 student loan $6,600 gas/maintenance $95 credit card balance $1,000 credit card payment $45 income: car insurance $45 gross monthly salary $2,155 clothing $45 net monthly salary $1,580 entertainment: savings allocation: cake decorating class $90 regular savings $130 movies with friends $50 rainy day savings $20

5. profit maximization and shutting down in the short run suppose that the market for polos is a competitive market. the following graph shows the daily cost curves of a firm operating in this market. 0 2 4 6 8 10 12 14 16 18 20 50 45 40 35 30 25 20 15 10 5 0 price (dollars per polo) quantity (thousands of polos) mc atc avc for each price in the following table, calculate the firm's optimal quantity of units to produce, and determine the profit or loss if it produces at that quantity, using the data from the previous graph to identify its total variable cost. assume that if the firm is indifferent between producing and shutting down, it will produce. (hint: you can select the purple points [diamond symbols] on the previous graph to see precise information on average variable cost.) price quantity total revenue fixed cost variable cost profit (dollars per polo) (polos) (dollars) (dollars) (dollars) (dollars) 12.50 135,000 27.50 135,000 45.00 135,000 if the firm shuts down, it must incur its fixed costs (fc) in the short run. in this case, the firm's fixed cost is $135,000 per day. in other words, if it shuts down, the firm would suffer losses of $135,000 per day until its fixed costs end (such as the expiration of a building lease). this firm's shutdown price—that is, the price below which it is optimal for the firm to shut down—is per polo.

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