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You have been appointed as a financial consultant by the Directors of auckland holdings they require you to calculate the cost of capital of the company. The following information is available on the capital structure of the company: 1 500 000 Ordinary Shares, with a market price R3 per share. The latest dividend was 95 cents per share. A dividend growth of 10% was maintained for the past 5 years. 1000 000 12%, R1 Preference shares with a market value of R2 per share. R1 000 000 9%, Debentures due in 7 years and the current yield-to-matuarity is 10%. R1 200 000 14% Bank loan, due in december 2022. Addistional Information: 1. The company has a tax rate of 30%. 2. The beta of the company is 1.5, a risk free rate of 6% and the return on the market is 15%. Required: 1.1 Calculate the weighted average cost of capital WACC. Use the Gordon Growth Model to calculate the cost of equity. 1.2 Calculate the cost of equity, using Capital Asset Pricing Model.
You are considering a walk-in podiatry clinic. Your financial projections for the first year of operations are as follows Revenues (10,000 visits) $400,000 Wages and Benefits 220,000 Rent 5,000 Depreciation 30,000 Utilities 2,040 Medical Supplies 50,..
Suppose you are committed to owning a $195,000 Ferrari. You believe your mutual fund can achieve an annual rate of return of 8 percent and you want to buy the car in 7 years. How much must you invest today to fund this purchase assuming the price of ..
Write a memo to the budget managers in an organization, assuming you are the CEO. Your memo should direct budget managers not to utilize this approach, but also offer a logical rationale, and perhaps an alternative solution.
Earnings per share of a company decreases if the additional capital it wanted was obtained by issuing additional shares of stock.
The management of Maverick Equipment Company is planning to purchase a new extruder that will cost $175,000 installed. The old machine has been fully depreciated, but can be sold for $18,000. The new machine will be depreciated on a straight line bas..
This problem has been submitted once already but the solution did not provide me any feedback to my how the calulations are made. I am looking to uncover how the present worth of each investment option was solved for? Which alternatives should Polari..
The Blitz Corporation is expected to pay a $1.50 per share dividend at the end of the year. The dividend is expected is expected to grow at a constant rate of 6% per year. The required rate of return on the stock is 11%. What is the current value per..
You estimate that you will need $628 thousand in 30 years to buy some cybernetic body enhancements, including infrared vision, retractable claws, and expanded brain storage capacity. To achieve your financial goal, you want to make three equal-sized ..
The balanced scorecard and dashboard reports look at what is most important to the success of the organization. An investor who goes long in a futures contract will _____ any increase in value of the underlying asset and will _____ any decrease in va..
A thorough introduction section A complete strategic analysis section (refer to page C9 of your textbook for components) A thorough solutions and recommendations section. The company I choose is staples. What recommendation do I seee changing the com..
The risk free rate is 3%, measured by a long-term U.S. government bond. The total market return is expected to be 11% over the foreseeable future. The Beta coefficient is 3.0 on the CAPM when finding out its hurdle rate for the project. The company e..
In the Capital Asset Pricing Model, systematic risk is related to:
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