3. Sunlight Batteries has a 40% debt. Its required return on assets (WACC) is 12% and...
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3. Sunlight Batteries has a 40% debt. Its required return on assets (WACC) is 12% and cost of debt is 8%. What is the company's cost of equity capital? If we increase debt to 55% what will be the new cost of equity. What will be weight of equity in sunlight if cost of equity is 20%. Assume we live in a world, where there's no tax. Explain MM proposition 2 (no tax; case 1). 4. A firm has free cash flow of 3,500,000 USD. When the firm was unlevered it had a cost of equity of 9%. Then it went for permanent leverage by borrowing 500,000 USD at 8% interest rate. Corporate tax rate 40%. What is the WACC of the company? If FCF increase to 4 million next year, what will be the value of the company? Commerce College 3. Sunlight Batteries has a 40% debt. Its required return on assets (WACC) is 12% and cost of debt is 8%. What is the company's cost of equity capital? If we increase debt to 55% what will be the new cost of equity. What will be weight of equity in sunlight if cost of equity is 20%. Assume we live in a world, where there's no tax. Explain MM proposition 2 (no tax; case 1). 4. A firm has free cash flow of 3,500,000 USD. When the firm was unlevered it had a cost of equity of 9%. Then it went for permanent leverage by borrowing 500,000 USD at 8% interest rate. Corporate tax rate 40%. What is the WACC of the company? If FCF increase to 4 million next year, what will be the value of the company? Commerce College
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SOLUTION 4 aCalculation of WACC Valur of equityFree cash flowCost of equity 350000000... View the full answer
Related Book For
Valuation Measuring and managing the values of companies
ISBN: ?978-0470424704
5th edition
Authors: Mckinsey, Tim Koller, Marc Goedhart, David Wessel
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