Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Calculation of weighted average cost of capital (WACC)
Market values
Market value of equity = 5m × 4.50 = $22.5 million
Market value of preference shares = 2.5m × .0762 = $1.905 million
Market value of 10% loan notes = 5m × (105/ 100) = $5.25 million
Total market value = 22.5m + 1.905m + 5.25m = $29.655 million
Cost of equity using dividend growth model = [(35 × 1.04)/ 450] + 0.04 = 12.08%
Cost of preference shares = 100 × 9/ 76.2 = 11.81%
Annual after-tax interest payment = 10 × 0.7 = $7
Using interpolation after-tax cost of loan notes = 5 + [(5 × 7.94)/ (7.94 + 20.96)] = 6.37%
WACC = [(12.08 × 22.5) + (11.81 × 1.905) + (6.37 × 5.25)]/ 29.655 = 11.05%
Companies with rapidly growing levels of sales do not need to worry about raising funds from outside the firm. Do you agree or disagree with this statement? Explain. Disagree
discuss the applicability of the operational cycle in vegetable growing business in uganda
What is the Modigliani-Miller's irrelevance hypothesis in dividend decision making? Critically evaluate its assumption.
Q. What do you mean by Working Capital? Meaning of Working Capital:- Working capital management is a significant aspect of financial management. In business money is necessar
what are the types of non-statuary reports?
It is the number that tells how many common stocks (or preference stocks) will the bondholder receive at the time of conversion. It is usually constant over
Explain the difference between the discounted free cash flow model as it is applied to the valuation of common equity and as it is applied to the valuation of complete businesses.
What is the meaning of Over-capitalisation It is the opposite of over trading. It means a company has a large volume of inventories, trade receivables and cash balances though
QUESTION Part A: 1. Nev Plc is considering to invest in a machine to manufacture a new line of umbrellas. The following data has been assembled in respect of the investment:
Can you help me out on the Time value of money????? I need urgent help on this topic...
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd