Assignment 2: Quantitative Exercises and Final Project 3: Government SecuritiesPart One: Quantitative ExercisesBarbow Enterprises Inc. is considering an expansion in their operations. One of the first items they want to examine is their cost of capital. According to the accounting department the following items and their respective costs have been identified:The cost of Common Equity: 15%The before tax cost of debt: 12%No Preferred stockThey have also calculated the marginal tax rate to be 40% and the stock sells at its book value.Barbow Enterprises Inc.Balance SheetAssetsLiabilities and Owners’ EquityCash$240Long Term Debt$2 304Accounts Receivable480Equity3 456Inventories720Net P&E4 320Total Assets$5 760Total Liabilities and owners’ Equity$5 760Required:Calculate Barbow’s after-tax weighted average cost of capital using the data in the balance sheet above.Deliverable:By Tuesday May 7 2013 submit the completed assignment to the W4: Assignment 2 Dropbox. Use a Microsoft Excel spreadsheet that illustrates your calculations. You may use the formulas embedded in MicrosoftExcel and/or a financial calculator for these calculations.
