Jacks Pty Ltd (ASX Listed Firm) provides mechanical services to the customers. Table below shows an extract
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Question:
Jacks Pty Ltd (ASX Listed Firm) provides mechanical services to the customers. Table below shows an extract of its balance sheet as at 30 June 2020:
Jacks Balance Sheet as at 30 June 2020 (Extract) | ||
| Book Value $ | Market Value $ |
Short Term Notes (15% interest) | 5,000,0000 | 6,000,000 |
Long Term Notes (10% interest) | 2,000,000 | 3,000,000 |
Share Capital | 1,000,000 | 5,000,000 |
1. Calculate cost of equity using CAPM if beta firm is 1.70, risk free rate 4.8%, and market risk premium is 5%. Round to two decimals.
2. How much is WACC with 30% tax rate? Hint: capital structure comprises of one equity and two debts components. Round to two decimals.
Expert Answer:
1 Cost of Equity Using CAPM Where RiskFree Rate 48 Beta 170 Market Risk Premium 5 Cost of Equity Ris... View the full answer
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