Finance Homework: WACC, NPV, IRR, and Bond Valuation Analysis

This document presents a comprehensive solution to a finance homework assignment. The solution addresses several key financial concepts, including Net Present Value (NPV), Internal Rate of Return (IRR), Weighted Average Cost of Capital (WACC), and bond valuation. The assignment begins with an analysis of a capital budgeting decision for Snowy Hills Lumber Ltd, determining whether to purchase a new wood saw using discounted cash flow analysis. The solution then calculates the Degree of Operating Leverage (DOL) for Vertical Ltd. Further, the assignment calculates the WACC for Witcheries Ltd. The solution also includes an expansion plan analysis using NPV, payback, and IRR methods. Finally, the document provides a bond valuation analysis, determining bond prices and the number of bonds to be issued under various scenarios, including the calculation of bond yields. The solution demonstrates a strong understanding of financial modeling and decision-making principles.