1) Retained Earnings (average of CAPM, DCF, and bond yield risk premium approaches) Cash: 2,000,000 Accounts Receivable: 28,000,000 Inventories:…

1) Retained Earnings (average of CAPM, DCF, and bond yield risk premium approaches)Cash: 2,000,000Accounts Receivable: 28,000,000Inventories: 42,000,000Net Fixed Assets: 133,000,000Total Assets: 205,000,000Accounts Payable and Accruals: 18,000,000Notes Payable: 40,000,000Long-term debt: 60,000,000Preferred STock: 10,000,000Common Equity: 77,000,000Total Claims: 205,000,000* Last Year’s Sales were $225,000,000* The Company has 60,000 bonds with 30 yr life outstanding, with 15yrs until maturity. The bonds carry a 10% semi annual coupon and are currently selling for $874.78* You also have 100,000 shares of $100 par, 9% dividend perpetual preferred stock outstanding. The Current Market price is $90.00. Any new issues of preferred stock would incur $3.00 per share flotation cost.*The company has 10 million shares of common stock outstanding with a currently price of $14 per share. Stock exhibits constant growth rate of 10%. The last divident (Do) was $.80. New stock could be sold with flotation costs, including market pressure, of 15%.*Stockholders require a risk premium of 5% above the return on the firms bonds.*Firm doesn’t use Notes Payable for long-term financing*Firm’s Tax Rate is 40%* Firm’s dividend payout ratio is 50% and net profit margin was 8.89%””

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