Show all your work in the space provided. If you need more space, use the space on the last page or, if necessary, attach another sheet of paper but be sure to indicate on these pages that your problem solution is continued elsewhere and state exactly where the answer continues. Total Credit: 2.5 points Problem Chapter 14 1) Titan Mining Corporation has 8.5 million shares of common stock outstanding and $200,000,000 book value of 7.5 percent semiannual bonds outstanding. The common stock currently sells for $34 and has a beta of 1.2 and the bonds mature in ten years and are priced to yield 8.5% annually. The market risk premium is 7 percent, T-bills are yielding 5%, and Titan Mining’s tax rate is 35 percent. (a) What if the firm’s market value capital structure. How do the market weights differ from the book value weights for the firm’s capital structure? Why are market weights better? (b) If Titan Mining 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? (c) In what circumstances would this rate be inappropriate to discount the cash flows for a project undertaken by the firm? Problems Chapter 16 2) This problem follows our discussion of the example in section 16.3 of the text and discussed in class, changing some numbers and assumptions. Assume that an unlevered firm Alpha is valued at $200,000, but that identical firm Beta has $100,000 in debt at 12% and that investors can borrow to buy stock at that rate. Follow the procedure used in class and use the following format for solving the problem to confirm your understanding of the M-M arbitrage argument concerning capital structure effects on firms’ values . (a) Calculate the net investment of cash to replicate cash flows from the ownership of 10% of Beta by buying 10% of Alpha with margin account loans. What must be the market value of Beta’s equity in no-arbitrage equilibrium? What are the expected returns on Alpha’s and Beta’s equity? (b) What is the total market value of Alpha and Beta? (c) What is the weighted-average cost of capital for Alpha and Beta? (d) Explain carefully the role arbitrage plays in determining the answers in (b) and (c). 3) New School Corporation expects an EBIT of $25,000 with a corporate tax rate of 35% in perpetuity; there is no bankruptcy risk. New School’s cost of equity is 12.5% and it has no debt. (a) What is the value of New School’s equity? What would be its WACC? (b) Debt would cost New School 8% before tax. Suppose New School borrowed half of its unlevered value and bought back equity. What would be its total value (debt and equity)? What would be its WACC given both the tax deductibility of debt and the increased risk of equity returns? (c) Imagine that New School borrowed 90% of its unlevered value and bought back equity. What would be its total value (debt and equity)? What would be its WACC given both the tax deductibility of debt and the increased risk of equity returns? (d) Why is the answer to (c) not reasonable when there are bankruptcy risks? 4) You own 10,000 shares of Chirayos-Chung Corporation that pays $ .20 in dividends at the end of each year and is currently (time zero) valued at $5 per share. Investors expect the firm to earn 20% on shares. Assume that instead of $2,000 per year you need cash flows of $40,000 at the end of years 2 and 4. By creating “homemade dividends” and re-investing unneeded cash dividends, what will be the remainder of the cash value of your position in the firm be in year 4? (Note that the price of shares will increase at the expected return minus cash dividends.) Show all your calculations. Problem from Chapter 17 5) Vulnerable Corporation, an all-equity corporation, has 10,000 shares priced at $5 per share. The firm is considering issuing debt valued at $25,000. The firm’s tax rate is 30%. The probability of the firm going into bankruptcy with this much debt is .1 (10%) and the cost of bankruptcy is expected to be 20% of the value of the debt plus $10,000 in legal costs, court fees, and expert analysis and a government claim of $10,000 for unpaid taxes. What is the total market value of the firm? If the firm reduced its bankruptcy risk to zero by reducing debt to $10,000, what would be the value of the firm? STATEMENT BY GROUP MEMBERS: The undersigned group members all contributed to the completion of this problem set and understand the source materials, basic techniques, and analysis used to answer these questions. Name (Last name first) Signature _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ USE THIS SPACE IF NEEDED TO FINISH ANSWERS TO ABOV

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“Communicating Policy Analysis” Please respond to the following:

• Assume you are a candidate for a director of communications for a major metropolitan county. The job will require you to communicate to the public about public policy regarding transportation, environmental issues, education, taxes, as well as economic development. Explain at least three reasons and ways written and oral communication are important, and should be used to ensure public policy analyses are promoted and accepted by the general public.
• Use the same scenario to explain at least two ways you would ensure public policy analyses are read and accepted by key stakeholders. Provide two reasons and an example to support your response.

 

Assignment 2.2: Justification Report – Part 2
Due Week 5 and worth 150 points

In Part 1 of your Justification Report assignment, you built up the following sections: Problem Statement, Overview of Alternatives, Criteria, and Methods. In Part 2, you will revise Part 1 based on your instructor’s suggestions and add to it the following sections: Evaluation of Alternatives, Findings and Analysis, and References.

Use the basic outline below to draft your paper. Organize your responses to each question under the following section headings:

• Evaluation of Alternatives (for Questions 1-3)
• Findings and Analysis (for Questions 4-5)
• References (for Question 6)

Using the provided template, write Part 2 of a single-spaced report in which you:

1. Include and revise the sections from Assignment 2.1 (Problem Statement, Overview of Alternatives, Criteria, and Methods) per instructor suggestions.
2. Research the two (2) alternatives (i.e. possible solutions) that you’ve identified in your Part 1 Evaluation of Alternatives section. Record bibliographic information during research.
   1. Example: You might research other organizations that have attempted similar solutions to the problem you have identified and explore the results of those experiments. 
3. Use what you discover in your research to evaluate each alternative by each of your five (5) criteria.
   1. Example: If your research revealed that four (4) companies similar to yours increased productivity after allowing their workers to telework from home three days per week, you might conclude that one of your suggested alternatives – in this case, the option to telework from home three days per week – satisfies one of your criterion of “Productivity” as a high-potential solution to a problem you’ve identified (of decreased worker morale and productivity at Doe’s Electronics). However, additional research might frustrate a recommendation of this alternative if it is found to fall short of other criteria while a second alternative fares better. For instance, a telework alternative might be found to be too costly to implement; too frustrating for consumers who prefer daily, in-person customer service; or too divergent from the company’s brand, “Always there for you!”
4. Organize the assignment by your criteria. Explain in narrative form how each of your two (2) alternatives stacks up against your first criterion. Next, explain how each alternative stacks up against your second criterion, etc.
   1. Example: An abbreviated outline of what this longer section might look like based on the above example is below (Note: Only the first two [2] of five [5] required criteria are included to give you a feel for the structure). Your researched findings, represented as circled bullets below, should be explained in two to five (2-5) sentences. Include in-text citations and follow up with References in APA style):

      Evaluation of Alternatives

      • Productivity
      1. • Alternative A: Telework from home three (3) days per week
           • {narrate findings based on research article 1 here}
         • Alternative B: Offer two (2) extra Floating Holidays to each employee per year
           • {narrate findings based on research article 2 here}
      • Cost
      1. • Alternative A: Telework from home three (3) days per week
           • {narrate findings based on research article 1 here}
         • Alternative B: Offer two extra Floating Holidays to each employee per year
         • • {narrate findings based on research article 2 here}
5. Briefly summarize in narrative form the major discoveries that emerged from the Evaluation of Alternatives section.
6. Include a chart like the ones below to illustrate at a glance:

   Figure 1: Alternatives Analyzed by Criteria

   Criteria	Telework Option	Floating Holiday Option
   Productivity	Very high	Negligible increase
   Cost	Very high	Moderate
   Company Image	Increased	Negligible increase
   Worker Morale	Increased	Negligible increase
   Practicality	Moderate	Low
   TOTAL Feasibility* of Alternatives based on Criteria?	Moderate to High	Low to Moderate

   *Feasability = Capability of an alternative being carried out with success

7. Include an APA style (6th edition) References page that documents the two (2) sources (minimum) that you used and cited in-text in your Evaluation of Alternatives section. You may use secondary resources, or you may include one primary source and one secondary source. Remember that both in-text citations and References must be included (to avoid plagiarism) whenever you are directly quoting, summarizing, or paraphrasing researched material.

Your assignment must:

• Be typed, single spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
• Include a cover page containing the title of the assignment, your name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.

The specific course learning outcomes associated with this assignment are:

• Support ideas or claims in body paragraphs with clear details, examples, and explanations.
• Organize ideas logically by using transitional words, phrases, and sentences.
• Use sentence variety and effective word choice in written communication.
• Apply writing process strategies to develop formal business reports and / or proposals.
• Use technology and information resources to research issues related to selected topics.
• Write clearly and concisely using proper writing mechanics.

 

Look into the future.

 

• What do you think caregiving will look like when you reach the point where you need it?
• How do you want caregiving to look for you?

 

Research and illustrate the options you would like to be available for you when you reach the age where you will need caregiving services.

 

Support your statements with evidence from the Required Studies and your research.