Question
In: Accounting
A company Star gives you the following data. Compute WACC. STOCK: nominal value 25 USD, market...
A company Star gives you the following data. Compute WACC.
STOCK: nominal value 25 USD, market value 40 USD, dividend at the
beginning of the year 5 USD, growth rate 2%, a company issued
20,000 pieces of stock.
BONDS: nominal value 50 USD, market value 40 USD, interest rate 10%, the company issued 5,000 pieces, number of years to maturity 11. Tax rate 20%.
Solutions
Expert Solution
Cost of debt:
| Calculator | |
| Inputs: | |
| PV | (40.00) |
| PMT | 4 |
| FV | 50 |
| N | 2 |
| Output: | |
| I/Y = effective interest rate | 21.2970% |
| After tax interest rate | 17.038% |
| Type | Capital (market value) | % of total capital | × Required return before tax | WACC |
| Debt | $ 200,000 | 20.00% | 17.038% | 3.41% |
| Preferred | $ - | 0.00% | 0.000% | 0.00% |
| Common | $ 800,000 | 80.00% | 14.7500% | 11.80% |
| =5*1.02/40+2% | ||||
| $ 1,000,000 | 15.21% |
WACC is 15.21%
please rate.
ekkarill92 answered 2 years agoRelated Solutions
Compute the book value of the stock, and compare it with the stock market value. Explain...
Compute the book value of the stock, and compare it with the
stock market value. Explain why the stock market value is higher
than its book value.
My company is Tesla (TSLA), how do I do this? What is the
analysis? I am using excel.
Stock Valuation, the WACC and the CAPM Compute the intrinsic value of two stocks and compare...
Stock Valuation, the WACC and the CAPM
Compute the intrinsic value of two stocks and compare the values
to the reported market stock price in order to determine if the
stock is undervalued or overvalued.
You should do the following:
Select any two U.S. public companies that pay dividends
(required to use the dividend discount model)
Compute each stock’s required rate of return using the Capital
Asset Pricing Model.
Compute the current period WACC for the selected firms
Compute the...
The accompanying table gives the stock market indices for a certain company on the stock market....
The accompanying table gives the stock market indices for a
certain company on the stock market. Use simple linear regression
to forecast the data.
Date Index Date (numeric)
9/3/2010 10,446.78 40424
9/7/2010 10,340.24 40428
9/8/2010 10,387.43 40429
9/9/2010 10,416.96 40430
9/10/2010 10,462.14 40431
9/13/2010 10,545.67 40434
9/14/2010 10,525.62 40435
9/15/2010 10,572.66 40436
9/16/2010 10,593.78 40437
9/17/2010 10,606.94 40438
9/20/2010 10,752.82 40441
9/21/2010 10,760.77 40442
9/22/2010 10,740.59 40443
9/23/2010 10,663.99 40444
9/24/2010 10,861.13 40445
9/27/2010 10,812.19 40448
9/28/2010 10,858.73 40449
9/29/2010 ...
Given the following data below, compute the following statistics: 15 25 24 15 20 30 25
Given the following data below,
compute the following statistics:
15
25
24
15
20
30
25
a)The median
b)The mode
c)The range and the midrange
d)?65!"
e)The mean
f)The variance
g)The standard deviation
17 Given the following data, compute the weighted average cost of capital (WACC). Components of capital...
17
Given the following data, compute the weighted average cost of
capital (WACC).
Components of capital
structure
After Tax Cost
Debt
$65
million
6.5%
Preferred Stock 35
million
10.5%
Common Equity 60
million
12.75%
Total
160 million
If the return on assets of the
corporation is 13% on an annual basis, calculate its profitability
and economic value added, EVA.
In the following Table you are given information on Real GDP and Nominal GDP. Compute the...
In the following Table you are given information on Real GDP and
Nominal GDP.
Compute the percentage change in Nominal GDP from 1970 to 1980
(15 points) and the percentage change in Real GDP (15 points) from
1970 to 1980.
Year
Nominal GDP
(In Current Prices)
Real GDP
(Base Year 2000 Prices)
1970
4,000
2,000
1980
6,000
4,500
Where do you attribute the difference between the two percentage
changes?
a). Compute the current value of a share of common stock of a company whose most...
a). Compute the current value of a share of common stock of a
company whose most recent dividend was RM2.50 and is expected to
grow 3% per year for the next 5 years, after which the dividend
growth rate will increase to 6% per year indefinitely. Assume 10%
required rate of return.
b).You are considering to purchase the stock of Tambunan Tea
Bhd. You expect it to pay a dividend of RM3 in 1 year, RM4.25 in 2
years and...
WACC Estimation The following table gives the balance sheet for Travellers Inn Inc. (TII), a company...
WACC Estimation
The following table gives the balance sheet for Travellers Inn
Inc. (TII), a company that was formed by merging a number of
regional motel chains.
Travellers Inn: (Millions of
Dollars)
Cash
$10
Accounts payable
$10
Accounts receivable
20
Accruals
10
Inventories
20
Short-term debt
5
Current assets
$50
Current liabilities
$25
Net fixed assets
50
Long-term debt
30
Preferred stock
5
Common equity
Common stock
$10
Retained earnings
30
Total common
equity
$40
Total assets
$100
Total liabilities...
WACC Estimation The following table gives the balance sheet for Travellers Inn Inc. (TII), a company...
WACC Estimation
The following table gives the balance sheet for Travellers Inn
Inc. (TII), a company that was formed by merging a number of
regional motel chains.
Travellers Inn: (Millions of
Dollars)
Cash
$10
Accounts payable
$10
Accounts receivable
20
Accruals
10
Inventories
20
Short-term debt
5
Current assets
$50
Current liabilities
$25
Net fixed assets
50
Long-term debt
30
Preferred stock
5
Common equity
Common stock
$10
Retained earnings
30
Total common
equity
$40
Total assets
$100
Total liabilities...
WACC Estimation The following table gives the balance sheet for Travellers Inn Inc. (TII), a company...
WACC Estimation
The following table gives the balance sheet for Travellers Inn
Inc. (TII), a company that was formed by merging a number of
regional motel chains.
Travellers Inn: (Millions of
Dollars)
Cash
$ 10
Accounts payable
$ 10
Accounts receivable
20
Accruals
15
Inventories
20
Short-term debt
0
Current assets
$ 50
Current liabilities
$ 25
Net fixed assets
50
Long-term debt
30
Preferred stock (50,000 shares)
5
Common equity
Common stock (3,800,000 shares)
$ 10
Retained earnings
30
Total common
equity
$ 40
Total...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- 1. Price Discrimination - Two Parts Pricing: Xerox In early days, the Xerox Corporation faced the...
- answer the following using C# Design and program a Visual Studio Console project in C# that...
- Write a program that acts as a basic calculator Assume the starting result is 0 Ask...
- Explain the following business terms: Explain what attestation means in business. Explain what assurance means in...
- Write a program to carry out the stated task: When one of the buttons is pressed,...
- The current asset section of the Excalibur Tire Company’s balance sheet consists of cash, marketable securities,...
- Write a program that uses a two-dimensional array to store the highest and lowest temperatures for...
ADVERTISEMENT