exploratory data analysis
I provide the instruction in the file. and also you need jupyter notebook or anyother software to open the ipynb type file inorder to read the EDA.I provide the ipynb file on google drive. https://drive.google.com/file/d/1y8QDz7Gm9lRDemcp-…you only need to do this part, write the analysis about EDA exploratory data analysis(which are those graph anaysis).2. Data processing and exploratory data analysis: provide key information about the data, discuss potential issues, and highlight interesting facts that are useful for the rest of your analysis. Due to possible lack space, you may want to refer to the appendix for most EDA plots.
1.Your consulting firm has been hired by Eco Brothers Inc. to help them estimate the cost of common equity. The yield on the firm’s bonds is 8.75%, and your firm’s economists believe that the cost of common can be estimated using a risk premium of 3.85% over a firm’s own cost of debt. What is an estimate of the firm’s cost of common from reinvested earnings?
2. Quinlan Enterprises stock trades for $52.50 per share. It is expected to pay a $2.50 dividend at year end (D1 = $2.50), and the dividend is expected to grow at a constant rate of 5.50% a year. The before-tax cost of debt is 7.50%, and the tax rate is 40%. The target capital structure consists of 45% debt and 55% common equity. What is the company’s WACC if all the equity used is from reinvested earnings?
3. The Lincoln Company sold a $1,000 par value, non-callable bond several years ago that now has 20 years to maturity and a 7.00% annual coupon that is paid semiannually. The bond currently sells for $925 and the company’s tax rate is 40%. What is the component cost of debt for use in the WACC calculation?
4. Westbrook’s Painting Co. plans to issue a $1,000 par value, 20-year non-callable bond with a 7.00% annual coupon, paid semiannually. The company’s marginal tax rate is 40.00%, but Congress is considering a change in the corporate tax rate to 30.00%. By how much would the component cost of debt used to calculate the WACC change if the new tax rate was adopted?
5. Trahern Baking Co. common stock sells for $32.50 per share. It expects to earn $3.50 per share during the current year, its expected dividend payout ratio is 65%, and its expected constant dividend growth rate is 6.0%. New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred. What would be the cost of equity from new common stock?
6. Kenny Electric Company’s non-callable bonds were issued several years ago and now have 20 years to maturity. These bonds have a 9.25% annual coupon, paid semiannually, sells at a price of $1,075, and has a par value of $1,000. If the firm’s tax rate is 40%, what is the component cost of debt for use in the WACC calculation?
7. You have been hired as a consultant by Feludi Inc.’s CFO, who wants you to help her estimate the cost of capital. You have been provided with the following data: rRF = 4.10%; RPM = 5.25%; and b = 1.30. Based on the CAPM approach, what is the cost of common from reinvested earnings?
8. You are a finance intern at Chambers and Sons and they have asked you to help estimate the company’s cost of common equity. You obtained the following data: D1 = $1.25; P0 = $27.50; gL = 5.00% (constant); and F = 6.00%. What is the cost of equity raised by selling new common stock?
9. A company’s perpetual preferred stock currently sells for $92.50 per share, and it pays an $8.00 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 5.00% of the issue price. What is the firm’s cost of preferred stock?
10. Suppose Acme Industries correctly estimates its WACC at a given point in time and then uses that same cost of capital to evaluate all projects for the next 10 years. With this assumption, what are the consequences for the following three questions 1) will the entire firm become more risky or less risky 2) will it drive WACC higher or lower and 3) will such consequence maximize the company’s intrinsic value? Please provide detailed reasoning for your answers.
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