Solve g, h, i and j part only in 1 hour only and get a thumb up plz solve this now. Leland 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, 2021LiabilitiesAssets$300,000Cash & Marketable Securities $$Accounts PayableOther Current Liabilities $425,000400,000425,000Accounts ReceivableTotal Current Liabilities $725,000500,0001,325,000InventoriesTotal Current Assets$Net Fixed Assets18,000,000LT Debt *2$6,500,000Preferred Stock **$2,500,000Common Stock***2$3,000,000Retained Earnings6,600,000Total Liabilities &$ 19,325,000Owners Equity$19,325,000Total 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.The CFO has gathered the information below to determine whether the project should beccepted. Government of Canada 91-day Treasury bills are currently yielding 3%, the S&P/TSXComposite Index has a standard deviation = 15% and a return = 10%.%3DLeland 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 = $575,000%3D%3Da) 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 YUMj) Suppose the IRR of Project YUM = 7%. Should the firm accept or reject the project?Explain.

Flotation cost refers to the expenses bear by a company when it issues new shares in the market.

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 Ralance Sheet

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 Ralance Sheet

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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