Epson Corp is domiciled in Nebraska, USA. Epson is a leader in the manufacture of type-setting...

Transcribed Image Text:

Epson Corp is domiciled in Nebraska, USA. Epson is a leader in the manufacture of type-setting equipment, with main markets in North America and Europe. The firm has seen improvement in its financials despite the setbacks over the last half of its fiscal year. The firm has 21,500,000 shares outstanding. The firm's shares are very liquid, trading at high volumes each day, with a last trading price of $16.60. Extracts of the firm's balance sheet shows: Long-term debt $315,225,000 $267,675,000 Equity capital (book value $12.45 ea.) The market reported treasury rates at 6.35%, and the firm is able to borrow at 9.50%. The firm's beta is 1.15 and there is a risk premium of 3.95%. The effective corporate tax rate of the firm is 32%. Required: Using the information provided to answer the following questions: What is Epson's market capitalization? What proportion of Epson's capital structure is debt? What proportion of Epson's capital structure is equity? What is Epson's cost of equity? What is Epson's cost of debt? What is Epson's Weighted Average Cost of Capital (WACC) Epson Corp is domiciled in Nebraska, USA. Epson is a leader in the manufacture of type-setting equipment, with main markets in North America and Europe. The firm has seen improvement in its financials despite the setbacks over the last half of its fiscal year. The firm has 21,500,000 shares outstanding. The firm's shares are very liquid, trading at high volumes each day, with a last trading price of $16.60. Extracts of the firm's balance sheet shows: Long-term debt $315,225,000 $267,675,000 Equity capital (book value $12.45 ea.) The market reported treasury rates at 6.35%, and the firm is able to borrow at 9.50%. The firm's beta is 1.15 and there is a risk premium of 3.95%. The effective corporate tax rate of the firm is 32%. Required: Using the information provided to answer the following questions: What is Epson's market capitalization? What proportion of Epson's capital structure is debt? What proportion of Epson's capital structure is equity? What is Epson's cost of equity? What is Epson's cost of debt? What is Epson's Weighted Average Cost of Capital (WACC)

Answer rating: 100% (QA)

Lets calculate each value step by step using the provided information Market Capitalization Market C... View the full answer