earview Systems Ltd. B 3 4 5 6 Based in Winnipeg, Manitoba, Clearview Systems Ltd. (CVL) was founded to provide security systems, facilities controls and related services. CVL established a solid reputation for quality and the business grew thanks to strong relationships with large, long-term customers in Canada and the United States. 7 8 9 10 11 12 13 14 The Research and Innovation Group (RIG) is the development side of the company. They are considering a new contract that will strain resources for not only RIG, but the entire company. With an upfront cost of $6.0 million, managers understand that the cost of capital will be a key part of maintaining and improving Clearview's competitive edge. You have been asked to calculate the company's weighted average cost of capital (WACC), based on the following information. 16 17 18 19 Over the last five years the annual dividends on the firm's common stock have grown at 6.00 percent per year and this growth is expected to continue nen Question Sheet Answer sheet New UCK HERE TO SAVE YOUR WORK AC21 Clearview Systems Ltd. B 17 18 19 20 Over the last five years the annual dividends on the firm's common stock have grown at 6.00 percent per year and this growth is expected to continue indefinitely. A common share dividend of $1.960 per share was recently paid. Common shares trade at $40.000 per share. The company has authorized 276,000 common shares, with 207,000 common shares issued and outstandin 21 22 23 24 25 26 27 The company has issued 165,000 of the 187,000 preferred shares authorized. The annual preferred share dividend is $1.380 per share. The latest preferred share price is $41.300 per share. 28 29 30 31 CVL has an outstanding bond issue, payable semi-annually, that originally had a 25 year maturity. The initial bond offering was sold 9 years ago, at par and raised $18.10 million dollars. (To be specific 18,100 bonds were sold at $1,000 KY Question Sheet Answer sheet New erge 2 Insert Row CLICK HERE TO SAVE YOUR WORK AC21 Clearview Systems Ltd. A B 25 26 27 The company has issued 165,000 of the 187,000 preferred shares authorized. The annual preferred share dividend is $1.380 per share. The latest preferred share price is $41.300 per share. 28 29 30 31 CVL has an outstanding bond issue, payable semi-annually, that originally had a 25 year maturity. The initial bond offering was sold 9 years ago, at par and raised $18.10 million dollars. (To be specific 18,100 bonds were sold at $1,000 each.) The yield to maturity, when they were issued, was 6.30 percent. Currently, the nominal yield to maturity on bonds with a similar risk is at 6.72 percent. 32 33 34 35 36 37 The company will use its current capital structure to set target weights for 38 debt, preferred shares and common shares. Flotation costs are 4.00 percent 39 for preferred shares, 3.00 percent for common shares and 5.00 percent for Il Question Sheet Answer sheet New Copy B i D US Overline Merge Cell Paste 3- Insert Row CLICK HERE TO SAVE YOUR WORK AC21 Clearview Systems Ltd. B percent. 34 35 36 37 38 39 The company will use its current capital structure to set target weights for debt, preferred shares and common shares. Flotation costs are 4.00 percent for preferred shares, 3.00 percent for common shares and 5.00 percent for debt. The company's tax rate is 30.00 percent. After-tax earnings for the year will be $4.00 million and the company has a payout ratio of 30.00 percent. 40 42 43 44 Use this information to answer the questions on the next spreadsheet tab. 46 48 49 50 Question Sheet Answer sheet New MM FE & Cut Insert Column Font Name Font Size TabStop > Wrap Text B i US Overline Delete Column 3. Delete Row Copy Merge Cell 2. Insert Row CLICK HERE TO SAVE YOUR WORK AC21 AL AM 4 AA AB AC AD AE AF AG AH AI AJ AK Bond prices should be to two decimal places (e... $1234) 5 Per share figures should be rounded to three decimal places (e.9 $1.234 per share) 6 Total dollar figures should be rounded to rero decimal places le 9 $1.234) 7 8 The following table is presented to help you organize the information from the case: 9 (there are no marks associated with the information in this table) 10 Bonds Pref Common 11 Y: Opercent Dp: $o D1:1 SO 12 Tc: O percent Pp: SO PO: SO 13 F: O percent F: O percent 8: O percent 14 F: O percent 15 16 Requirements: 17 A. Find market values of outstanding bonds, preferred shares and common shares: 1B 1. Bonds: a. What is the market value of each bond? (Enter your answer to two decimal places. (0.9. 12:34) 21 15. What is the total market value of bonds at Dec 31, 2020 found your answer to whole numbers. For example, 51,234,000 not $1.234 million 23 1 Question Sheet Draft Why is the total market vala nf nafarral characsna-21 Answer sheet Now 19 SO so hp HERE TO SAVE YOUR WORK AC21 AA AB AC AD AE AF AG AH AI AJ AK AL F: Opercent Requirements: A. Find market values of outstanding bonds, preferred shares and common shares: 1. Bonds: a. What is the market value of each bond? (Enter your answer to two decimal places. (eg. $12.34)) 1. What is the total market value of bonds at Dec 31, 2020 (Round your answer to whole numbers. For example, $1,234,000 not $1 234 million) 2 3 2. Preferred shares: What is the total market value of preferred shares at Dec 31, 2020 (Round your answer to whole numbers. For example, $1.234,000 not $1.234 million) 25 26 27 28 29 3. Common shares: What is the total market value of common shares at Dec 31, 2020 (Round your answer to whole numbers. For example, $1,234,000 not $1.234 million.) B. What weights are assigned to debt, preferred shares and common equity on Dec 31, 2020 30 (Round all your answers to two decimal places if you want to enter the number 12.34%, 81 for example, enter 12.34 (not 0.1234) and do not enter the percent sign.) C.Calculate the after-tax cost of the various components of WACC: 1 Question Sheet Answer sheet New Debt Preferred Common 33 w Copy M Overline Merge Cell 3. Insert Row 2. Deler HERE TO SAVE YOUR WORK AC21 AA AB AC AD AE AF AG AH AI AJ AK AL 3. Common shares: What is the total market value of common shares at Dec 31, 2020 (Round your answer to whole numbers. For example, 51,234,000 not $1.234 million) B. What weights are assigned to debt, preferred shares and common equity on Dec 31, 2020 (Round all your answers to two decimal places. If you want to enter the number 12.34% for example, enter 12.34 (not 0.1234) and do not enter the percent sign.) Debt Preferred Common C. Calculate the after-tax cost of the various components of WACC: (Round all your answers to two decimal places. If you want to enter the number 12.34%, 5 1. Bonds a. What is the nominal yield-to-maturity? 7 b. What is the effective yield-to-maturity? 18 c. Calculate the after-tax cost of new debt (using the effective yield-to-maturity) 89 40 2. Preferred shares: 41 3. Common equity in the form of retained earnings: 43 4. Common equity in the form of new shares: 45 D. What is the Weighted Average Cost of Capital if: 14) Question Sheet Answer sheet New DAIA VIEW * Cut MM Insert Column Font Name Font Size TabStop Wrap Text Bi Da US Overline Delete Column Delete Row A Copy Merge Cell 3. Insert Row ERE TO SAVE YOUR WORK AC21 A AB AC AD AE AF AG AH AI AJ AK AL AM 4. Common equity in the form of new shares: D. What is the weighted Average Cost of Capital if: (Round all your answers to two decimal places. If you want to enter the number 12.34%, 1. the company uses new debt, new preferred shares and just retained earnings? After-tax Cost Weights pe Debt Pref Common per WACC per pers 2. the company uses new debt, new preferred shares and new common shares? After-tax Cost Weights Debt Pref Common 1 2 WACCI percen How much of the norantalenbactean ha fundar with wine roshareholders? Question Sheet Answer sheet New earview Systems Ltd. B 3 4 5 6 Based in Winnipeg, Manitoba, Clearview Systems Ltd. (CVL) was founded to provide security systems, facilities controls and related services. CVL established a solid reputation for quality and the business grew thanks to strong relationships with large, long-term customers in Canada and the United States. 7 8 9 10 11 12 13 14 The Research and Innovation Group (RIG) is the development side of the company. They are considering a new contract that will strain resources for not only RIG, but the entire company. With an upfront cost of $6.0 million, managers understand that the cost of capital will be a key part of maintaining and improving Clearview's competitive edge. You have been asked to calculate the company's weighted average cost of capital (WACC), based on the following information. 16 17 18 19 Over the last five years the annual dividends on the firm's common stock have grown at 6.00 percent per year and this growth is expected to continue nen Question Sheet Answer sheet New UCK HERE TO SAVE YOUR WORK AC21 Clearview Systems Ltd. B 17 18 19 20 Over the last five years the annual dividends on the firm's common stock have grown at 6.00 percent per year and this growth is expected to continue indefinitely. A common share dividend of $1.960 per share was recently paid. Common shares trade at $40.000 per share. The company has authorized 276,000 common shares, with 207,000 common shares issued and outstandin 21 22 23 24 25 26 27 The company has issued 165,000 of the 187,000 preferred shares authorized. The annual preferred share dividend is $1.380 per share. The latest preferred share price is $41.300 per share. 28 29 30 31 CVL has an outstanding bond issue, payable semi-annually, that originally had a 25 year maturity. The initial bond offering was sold 9 years ago, at par and raised $18.10 million dollars. (To be specific 18,100 bonds were sold at $1,000 KY Question Sheet Answer sheet New erge 2 Insert Row CLICK HERE TO SAVE YOUR WORK AC21 Clearview Systems Ltd. A B 25 26 27 The company has issued 165,000 of the 187,000 preferred shares authorized. The annual preferred share dividend is $1.380 per share. The latest preferred share price is $41.300 per share. 28 29 30 31 CVL has an outstanding bond issue, payable semi-annually, that originally had a 25 year maturity. The initial bond offering was sold 9 years ago, at par and raised $18.10 million dollars. (To be specific 18,100 bonds were sold at $1,000 each.) The yield to maturity, when they were issued, was 6.30 percent. Currently, the nominal yield to maturity on bonds with a similar risk is at 6.72 percent. 32 33 34 35 36 37 The company will use its current capital structure to set target weights for 38 debt, preferred shares and common shares. Flotation costs are 4.00 percent 39 for preferred shares, 3.00 percent for common shares and 5.00 percent for Il Question Sheet Answer sheet New Copy B i D US Overline Merge Cell Paste 3- Insert Row CLICK HERE TO SAVE YOUR WORK AC21 Clearview Systems Ltd. B percent. 34 35 36 37 38 39 The company will use its current capital structure to set target weights for debt, preferred shares and common shares. Flotation costs are 4.00 percent for preferred shares, 3.00 percent for common shares and 5.00 percent for debt. The company's tax rate is 30.00 percent. After-tax earnings for the year will be $4.00 million and the company has a payout ratio of 30.00 percent. 40 42 43 44 Use this information to answer the questions on the next spreadsheet tab. 46 48 49 50 Question Sheet Answer sheet New MM FE & Cut Insert Column Font Name Font Size TabStop > Wrap Text B i US Overline Delete Column 3. Delete Row Copy Merge Cell 2. Insert Row CLICK HERE TO SAVE YOUR WORK AC21 AL AM 4 AA AB AC AD AE AF AG AH AI AJ AK Bond prices should be to two decimal places (e... $1234) 5 Per share figures should be rounded to three decimal places (e.9 $1.234 per share) 6 Total dollar figures should be rounded to rero decimal places le 9 $1.234) 7 8 The following table is presented to help you organize the information from the case: 9 (there are no marks associated with the information in this table) 10 Bonds Pref Common 11 Y: Opercent Dp: $o D1:1 SO 12 Tc: O percent Pp: SO PO: SO 13 F: O percent F: O percent 8: O percent 14 F: O percent 15 16 Requirements: 17 A. Find market values of outstanding bonds, preferred shares and common shares: 1B 1. Bonds: a. What is the market value of each bond? (Enter your answer to two decimal places. (0.9. 12:34) 21 15. What is the total market value of bonds at Dec 31, 2020 found your answer to whole numbers. For example, 51,234,000 not $1.234 million 23 1 Question Sheet Draft Why is the total market vala nf nafarral characsna-21 Answer sheet Now 19 SO so hp HERE TO SAVE YOUR WORK AC21 AA AB AC AD AE AF AG AH AI AJ AK AL F: Opercent Requirements: A. Find market values of outstanding bonds, preferred shares and common shares: 1. Bonds: a. What is the market value of each bond? (Enter your answer to two decimal places. (eg. $12.34)) 1. What is the total market value of bonds at Dec 31, 2020 (Round your answer to whole numbers. For example, $1,234,000 not $1 234 million) 2 3 2. Preferred shares: What is the total market value of preferred shares at Dec 31, 2020 (Round your answer to whole numbers. For example, $1.234,000 not $1.234 million) 25 26 27 28 29 3. Common shares: What is the total market value of common shares at Dec 31, 2020 (Round your answer to whole numbers. For example, $1,234,000 not $1.234 million.) B. What weights are assigned to debt, preferred shares and common equity on Dec 31, 2020 30 (Round all your answers to two decimal places if you want to enter the number 12.34%, 81 for example, enter 12.34 (not 0.1234) and do not enter the percent sign.) C.Calculate the after-tax cost of the various components of WACC: 1 Question Sheet Answer sheet New Debt Preferred Common 33 w Copy M Overline Merge Cell 3. Insert Row 2. Deler HERE TO SAVE YOUR WORK AC21 AA AB AC AD AE AF AG AH AI AJ AK AL 3. Common shares: What is the total market value of common shares at Dec 31, 2020 (Round your answer to whole numbers. For example, 51,234,000 not $1.234 million) B. What weights are assigned to debt, preferred shares and common equity on Dec 31, 2020 (Round all your answers to two decimal places. If you want to enter the number 12.34% for example, enter 12.34 (not 0.1234) and do not enter the percent sign.) Debt Preferred Common C. Calculate the after-tax cost of the various components of WACC: (Round all your answers to two decimal places. If you want to enter the number 12.34%, 5 1. Bonds a. What is the nominal yield-to-maturity? 7 b. What is the effective yield-to-maturity? 18 c. Calculate the after-tax cost of new debt (using the effective yield-to-maturity) 89 40 2. Preferred shares: 41 3. Common equity in the form of retained earnings: 43 4. Common equity in the form of new shares: 45 D. What is the Weighted Average Cost of Capital if: 14) Question Sheet Answer sheet New DAIA VIEW * Cut MM Insert Column Font Name Font Size TabStop Wrap Text Bi Da US Overline Delete Column Delete Row A Copy Merge Cell 3. Insert Row ERE TO SAVE YOUR WORK AC21 A AB AC AD AE AF AG AH AI AJ AK AL AM 4. Common equity in the form of new shares: D. What is the weighted Average Cost of Capital if: (Round all your answers to two decimal places. If you want to enter the number 12.34%, 1. the company uses new debt, new preferred shares and just retained earnings? After-tax Cost Weights pe Debt Pref Common per WACC per pers 2. the company uses new debt, new preferred shares and new common shares? After-tax Cost Weights Debt Pref Common 1 2 WACCI percen How much of the norantalenbactean ha fundar with wine roshareholders? Question Sheet Answer sheet New