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  3. note: i will post the remaining parts of the quest

NOTE: I will post the remaining parts of the question in different questions (4 total)....

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Accounting

NOTE: I will post the remaining parts of the question in different questions (4 total). Thanks!

7. The company will incur $7,900,000 in annual fixed costs, and the variable production costs are $9,000 per RDS in the first year. The following 4 years, variable production costs will grow at a rate of 5%, 3%, 2%, and 2% annually, i.e. year over year.

8. RTXs tax rate is 21 percent.

The following market data on RTXs securities is current:

Debt:

222,000, 5.6 percent coupon bonds are outstanding, 15 years to maturity, selling for 97.36 percent of par; the bonds have a $1,000 par value each and make semiannual payments.

Common:

8,000,000 shares outstanding, selling for $82.81 per share; you have stock prices and S&P 500 index value for the past five years.

Preferred:

442,000 shares of 5 percent preferred stock outstanding, selling for $103.76 per share and having a par value of $100.

Market:

7 percent expected market risk premium; 3 percent risk-free rate.

You will need to estimate RTXs beta using the data in the data file. To do so, you need to convert the prices to returns and then use the Excel slope command.

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