Calculate BAE System's Cost of Equity (Ke), Cost of Debt (Kd) and Weighted Average Cost of...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Calculate BAE System's Cost of Equity (Ke), Cost of Debt (Kd) and Weighted Average Cost of Capital (WACC) for each year for the last 5 years. Show your workings and state the sources for any of your assumptions A potential investor in BAE Systems has raised concerns that the company has entered the top ten of companies with the highest level of pension scheme contributions relative to their dividends declared in a year. The potential investor is concerned that this may suggest a prioritising of the financial health of the pension scheme over maximising returns to investors. Contributions as a percentage of Name Rank Contributions (Em) Dividends paid (Em) dividends Tesco 1 279 100 279% International Airlines Group 2 881 512 172% Royal Mail Group 3 272 231 118% Royal Bank of Scotland 4 627 583 108% Barclays 5 1,152 1,273 90% BT 6 1,136 1,436 79% Pearson 7 242 318 76% BAE Systems 8 517 692 75% Smiths Group 9 99 167 59% Morrison Supermarkets 10 75 129 58% Source: JLT Quarterly Reports (Jan 2019) The FTSE 100 and their Pension Disclosures Calculate BAE System's Cost of Equity (Ke), Cost of Debt (Kd) and Weighted Average Cost of Capital (WACC) for each year for the last 5 years. Show your workings and state the sources for any of your assumptions A potential investor in BAE Systems has raised concerns that the company has entered the top ten of companies with the highest level of pension scheme contributions relative to their dividends declared in a year. The potential investor is concerned that this may suggest a prioritising of the financial health of the pension scheme over maximising returns to investors. Contributions as a percentage of Name Rank Contributions (Em) Dividends paid (Em) dividends Tesco 1 279 100 279% International Airlines Group 2 881 512 172% Royal Mail Group 3 272 231 118% Royal Bank of Scotland 4 627 583 108% Barclays 5 1,152 1,273 90% BT 6 1,136 1,436 79% Pearson 7 242 318 76% BAE Systems 8 517 692 75% Smiths Group 9 99 167 59% Morrison Supermarkets 10 75 129 58% Source: JLT Quarterly Reports (Jan 2019) The FTSE 100 and their Pension Disclosures
Expert Answer:
Related Book For
Foundations of Finance The Logic and Practice of Financial Management
ISBN: 978-0132994873
8th edition
Authors: Arthur J. Keown, John D. Martin, J. William Petty
Posted Date:
Students also viewed these finance questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
State which graph (Pareto chart, time series graph, or pie graph) would most appropriately represent the given situation. a. The number of students enrolled at a local college for each year during...
-
1. Consider the linear system Ax = b (all integer values) with the notation shown below, 1 -3 -1 -2 - H 5 7 - 2261x11 X2 -4 3 9 16x3 615 LX4- = A X b The element a24 = a has been lost. Assume,...
-
Consider the data of the following companies: Requirements 1. Supply the missing amounts in the preceding table. 2. Prepare the income statement for the year ended December 31. 2015, for Red Company,...
-
If a firm needs to keep a minimum cash balance on hand and faces both cash inflows and outflows, which of the cash management models discussed in this chapter would be more appropriate for them to...
-
On April 4, 2014, Athanasios Valsamis lost his appeal to get his money back from a friend to whom he had loaned \($700,000.\) As you will read, this case underscores the consequence of failing to...
-
Marvel Parts, Inc., manufactures auto accessories. One of the companys products is a set of seat covers that can be adjusted to fit nearly any small car. The company has a standard cost system in use...
-
Data Input Box: Number of mortgages in initial pool 500 Average mortgage balance $300,000 Initial mortgage pool balance $150,000,000 Prepayment rate 7.50% Mortgage rate 4.50% Servicing and Guarantee...
-
TLM Corporations accounting records include the following items, listed in no particular order, at December 31, 2025: The income tax rate for TLM Corporation is 21%. Prepare TLM Corporations income...
-
Each of two independent projects has a probability 0.98 of a loss of $1 million and 0.02 probability of a loss of $10 million What is the 97.5% VaR for each project? What is the 97.5% expected...
-
What legal policy in Texas requires higher resource school districts to send more to poorer districts to increase equity in public school funding?
-
What are the recent financial stimulus of the government given to the business world and the public during the pandemic ? (by printing dollars) might have diluted the value of the dollar.
-
In which ways do you think that climate change related risks can affect the financial system and the global economy? Please provide some examples.
-
Carol believes that those who benefit most from government services such as unemployment and food stamps should pay more in taxes. What term best describes the sort of taxation that Carol supports?
-
In factor markets, what is the primary resource that is bought and sold? Explain briefly
-
The storage battery of a car has an emf of 12 V. If the internal resistance of the battery is 0.4 what is the maximum current that can be drawn from the battery?
-
Record the following selected transactions for March in a two-column journal, identifying each entry by letter: (a) Received $10,000 from Shirley Knowles, owner. (b) Purchased equipment for $35,000,...
-
To buy a new house you take out a 25- year mortgage for $ 300,000. What will your monthly payments be if the interest rate on your mortgage is 8 percent? Use a spreadsheet to calculate your answer....
-
Using the CAPM, estimate the appropriate required rate of return for the three stocks listed here, given that the risk- free rate is 5 percent and the expected return for the market is 12 percent.
-
Marston Mfg. recently declared a 4- for- 1 stock split for its common shares. Before the split the firms share price had risen to $ 600 per share and the firms CFO felt that this high stock price...
-
There is another possible explanation for purchased goodwill appearing in a sole proprietor's statement of financial position. What do you think it might be?
-
Why do the assets need to be revalued in these cases? The business has not been sold.
-
The shown partners have always shared profits and losses in the ratio: Holt 4; Stott 2: Young 1. From 1 January the assets were to be revalued as the profit sharing ratios are to be altered soon. The...
Study smarter with the SolutionInn App