Solve a, b and c part only in one hour ( by handwritten not by excel) plz solve only by hand Personal Hotspot :1 connection(s)@ 41% 4Leland Industries is a producer of bakery and snack goods in Western Canada and areconsidering expending into Eastern Canada. The expansion is estimated to cost$10,000,000 for a new production facility. This project is in the same line of business asthe firm's current operations and is therefore not expected to alter the risk of the firm.The most recent balance sheet is provided below.Leland IndustriesBalance SheetAs at Dec 31, 2021LiabilitiesAssetsAccounts Payable300,000Cash & Marketable Securities $Accounts ReceivableInventories425,000Other Current Liabilities STotal Current Liabilities $425,000725,000400,000500.0001,325,00018.000,000Total Current AssetsLT Debt6,500,000Net Fixed AssetsPreferred Stock **Common Stock***Retained Earnings242,500,0003.000,000246.600,000Total Liabilities &$ 19,325,000Owners Equity19,325,000Total Assetsotes to financial statements:* The 5% semi-annual coupon bonds have a face value of $1,000, were issued 5 yearsago and have 10 years to maturity. The bonds are currently selling for a quoted price of92.56.**The preferred shares have a $100 par value and 3.5% dividend and are currentlyselling for $43.75 per share.***There are 500,000 common shares outstanding that are currently selling for $24.06per share.he CFO has gathered the information below to determine whether the project should beccepted. 5:29 pm@ 41% 4Government of Canada 91-day Treasury bills are currently yielding 3%, the S&P/TSXComposite Index has a standard deviation = 15% and a return = 10%.Leland shares have a covariance with the market portfolio = 450 (or .0045 if usingdecimals).The marginal tax rate = 35%• The firm has enough internally funds to finance the equity portion of this project.Flotation costs are expected to be as follows: new debt=5%, new preferred shares = 6%and new common shares = 7%.The most recent dividend paid was $1.75. Dividends are expected to grow at a constantrate =8%, forever.Assume flotation costs are expensed at time = 0.The expansion project is expected to produce annual cash flows before tax of$2,100,000 per year for the next fifteen years.The assets associated with the expansion will have no value in 15 years' time.The Present Value of the CCA tax shield associated with the new project = $575,000a) Calculate Leland's before- tax cost of debt.b) Calculate Leland's cost of preferred shares.c) Calculate Leland's cost of common equity using the Dividend Discount Model.d) Calculate Leland's cost of common equity using the Security Market Line.e) Calculate the capital structure weights.f) Calculate the discount rate that should be used to evaluate the expansion into EasternCanada. Use your answer from (d) above in your calculation for the cost of equity.g) Calculate the total initial investment for the expansionh) Based on a NPV analysis, should Leland expand into Eastern Canada? Show your work.i) The firm is also considering another project (Project YUM) that has less risk than the firm.This new project will be financed using a D/E ratio = 0.65. A pure-play firm has beenidentified that has a beta = 0.75; D/E ratio = 1.5 and a tax rate = 40%. The cost of debt andtax rate for the new project will be the same as Leland's. Calculate the discount rate thatshould be used to evaluate this new project (Project YUMi) Suppose the IRR of Project YUM = 7%. Should the firm accept or reject the project?Explain.

Here, Details of Debt: Par Value of Bond is $1,000 Present value of Bond is $925.6 Coupon rate of…

Leland Industries is a producer of bakery and snack goods in Western Canada and are considering expending into Eastern Canada. The expansion is estimated to cost $10,000,000 for a new production facility. This project is in the same line of business as the firm's current operations and is therefore not expected to alter the risk of the firm. The most recent balance sheet is provided below. Leland Industries Balance Sheet As at Dec 31, 2021 Liabilities Assets 300,000 Cash & Marketable Securities $ Accounts Receivable Accounts Payable Other Current Liabilities S Total Current Liabilities $ 425,000 400,000 425.000 725,000 Inventories Total Current Assets 500,000 1,325,000 $ 18.000.000 LT Debt* 6,500,000 Net Fixed Assets Preferred Stock* Common Stock*** 2,500,000 3,000,000 Retained Earnings 6.600,000 Total Liabilities & $ 19,325,000 | Owners Equity 19,325,000 Total Assets es to financial statements: * The 5% semi-annual coupon bonds have a face value of $1,000, were issued 5 years ago and have 10 years to maturity. The bonds are currently selling for a quoted price of 92.56. The preferred shares have a $100 par value and 3.5% dividend and are currently selling for $43.75 per share. *There are 500,000 common shares outstanding that are currently selling for $24.06 per share. e CFO has gathered the information below to determine whether the project should be cepted.

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter12: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 12.1.2P