(a) Raudhah is a financial analyst at Goggle Tradings, seeking opportunities to expand the company's business...

 

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(a) Raudhah is a financial analyst at Goggle Tradings, seeking opportunities to expand the company's business internationally. Prior to the business expansion, Raudhah is required to finalize on the company's cost of capital. The company's capital structures comprise of 50 percent debts and the remainder are equity. The 11 monthly treasury bills are at 5 percent. The other financial details needed to be considered are as follows: Assumptions Cost of debt, before tax (%) Corporate income tax (%) Return on market portfolio (%) Systematic risk Domestic 15 25 14 1.15 International 13.5 30 18 0.85 Based on the information above: i. Compute the Weighted Average Cost of Capital (WACC) for domestic and international companies. (12 marks) ii. Suggest and provide a reason on which WACC is the better alternative. [25 Mark] (3 marks) (b) A nation's exchange rate regime is the term given to a currency system Depending on the objectives, countries can select which exchange rate regime to adhere to There are numerous possible exchange rate systems that countries could choose from, either fix or float their exchange rate. Discuss FIVE (5) of the exchange rate regime classification (10 marks) (a) Raudhah is a financial analyst at Goggle Tradings, seeking opportunities to expand the company's business internationally. Prior to the business expansion, Raudhah is required to finalize on the company's cost of capital. The company's capital structures comprise of 50 percent debts and the remainder are equity. The 11 monthly treasury bills are at 5 percent. The other financial details needed to be considered are as follows: Assumptions Cost of debt, before tax (%) Corporate income tax (%) Return on market portfolio (%) Systematic risk Domestic 15 25 14 1.15 International 13.5 30 18 0.85 Based on the information above: i. Compute the Weighted Average Cost of Capital (WACC) for domestic and international companies. (12 marks) ii. Suggest and provide a reason on which WACC is the better alternative. [25 Mark] (3 marks) (b) A nation's exchange rate regime is the term given to a currency system Depending on the objectives, countries can select which exchange rate regime to adhere to There are numerous possible exchange rate systems that countries could choose from, either fix or float their exchange rate. Discuss FIVE (5) of the exchange rate regime classification (10 marks)

Answer rating: 100% (QA)

i Calculation of Weighted Average Cost of Capital WACC Domestic CompanyCost of Debt 15Corporate Income Tax 25Market Portfolio Return 14DebttoEquity Ra... View the full answer