re: finance  cost of capital
Project Description:
given the following, find the wacc assuming the company‘s tax rate is 30%.
debt: 8500 bonds, outstanding with a 7.2% coupon, $1000 par value, 25 years to maturity, current market yield is 5,82%, coupons made semiannually.
ordinary shares: 225000 shares outstanding, selling for $87 per share, beta is 1.15.
preference shares: paying dividends of 8% of a $100 par value, 15 000 outstanding, currently selling for $98 per share.
other information: market risk premium = 7%, riskfree rate = 3.1%
a) what is the total market value of the bonds?
b) what is the total market value of preference shares?
c) what is the total market value of ordinary shares?
d) what is the required rate of return on preference shares?
e) what is the required rate of return on ordinary shares?
f) what is the weighted average cost of capital?
already have the answers, just need the working out.
debt: 8500 bonds, outstanding with a 7.2% coupon, $1000 par value, 25 years to maturity, current market yield is 5,82%, coupons made semiannually.
ordinary shares: 225000 shares outstanding, selling for $87 per share, beta is 1.15.
preference shares: paying dividends of 8% of a $100 par value, 15 000 outstanding, currently selling for $98 per share.
other information: market risk premium = 7%, riskfree rate = 3.1%
a) what is the total market value of the bonds?
b) what is the total market value of preference shares?
c) what is the total market value of ordinary shares?
d) what is the required rate of return on preference shares?
e) what is the required rate of return on ordinary shares?
f) what is the weighted average cost of capital?
already have the answers, just need the working out.
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