FINANCE 620 Assignments1. (WACC) If Wild Widgets, Inc., were an all-equity company, it wou

FINANCE 620 Assignments1. (WACC) If Wild Widgets, Inc., were an all-equity company, it would have a beta of .85. The company has a target debt–equity ratio of .40. The expected return on themarket portfolio is 11 percent, and Treasury bills currently yield 4 percent. Thecompany has one bond issue outstanding that matures in 20 years and has a couponrate of 7 percent. The bond currently sells for $1,080. The corporate tax rate is 34percent.a) What is the company’s cost of debt? (Do not round intermediate calculations and roundyour final answer to 2 decimal places. (e.g., 32.16))Cost of debt _______%b) What is the company’s cost of equity? (Do not round intermediate calculations and roundyour final answer to 2 decimal places. (e.g., 32.16))Cost of equity ______%c) What is the company’s weighted average cost of capital? (Do not round intermediatecalculations and round your final answer to 2 decimal places. (e.g., 32.16))WACC________%2. (IPO Underpricing) The Woods Co. and the Garcia Co. have both announced IPOsat $40 per share. One of these is undervalued by $9, and the other is overvalued by$4, but you have no way of knowing which is which. You plan on buying 1,000shares of each issue. If an issue is underpriced, it will be rationed, and only half yourorder will be filled.a) If you could get 1,000 shares in Woods and 1,000 shares in Garcia, what would yourprofit be? (Do not round intermediate calculations.)Profit _______$b) What profit do you actually expect? (Do not round intermediate calculations.)Expected profit ______$3. (Lease or Buy) Wolfson Corporation has decided to purchase a new machine thatcosts $3.2 million. The machine will be depreciated on a straight-line basis and willbe worthless after four years. The corporate tax rate is 35 percent. The Sur Bankhas offered Wolfson a four-year loan for $3.2 million. The repayment schedule isfour yearly principal repayments of $800,000 and an interest charge of 9 percent onthe outstanding balance of the loan at the beginning of each year. Both principalrepayments and interest are due at the end of each year. Cal Leasing Corporationoffers to lease the same machine to Wolfson. Lease payments of $950,000 per yearare due at the beginning of each of the four years of the lease.a) What is the NAL of leasing for Wolfson? (Do not round intermediate calculations andround your final answer to 2 decimal places. (e.g., 32.16))