1) Boeing Company stick price=212.67 ordinary shares =582320 Long term debit and capital=61890000 current debit capital =1961000...

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Question:

1) Boeing Company
stick price=212.67
ordinary shares =582320
Long term debit and capital=61890000
current debit capital =1961000
Cash=7752000
short term debit=1961000
current portion of ling term debit =
coupon=8750
price=99.518
yield=50.224
Current Asset=121642000
Cash equivalent =25590000

market value of equity = share price*share stand
Marke value of equity= 123841994.4

Find the D/E Ratio

2).
rE=rU+D/E(rU - rD)
rE=0.12+0.30895012783(0.12-50.224)
rE=-15.35963717824

3. Compute the current weighted average cost of capital (WACC) for Boeing using Eq. (2) given their current debt-to-equity ratio

Formula
rwacc=rA=rU=E/(E+D) re+D/(E+D) rd Eq(2)

4. Repeat Steps 3 and 4 for the two scenarios you would like to analyze, issuing $1 Billion in debt to repurchase stock, and issuing $1 Billion in stock to repurchase debt. (Although you realize that the cost of debt capital rD may change with changes in leverage, for these modestly small changes you decide to assume that rD remains constant. What is the market D/E ratio in each of these cases?

5. Prepare a written explanation for your boss explaining the relationship between capital structure and the cost of capital in this exercise.