HiLife Ltd's latest balance sheet shows a long-term debt of $30 million and shareholders' funds of...
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HiLife Ltd's latest balance sheet shows a long-term debt of $30 million and shareholders' funds of $50 million. HiLife issued 10-year bonds exactly 7 years ago, each with a face value of $1,000 and an annual coupon rate of 9%. The coupon is paid annually at the end of each year. The bonds are currently trading at a yield of 6.0% p.a. HiLife has 50 million shares on issue and the current share price is $4.00. The company's share beta is 1.50, the market risk premium is estimated at 7.0% p.a., the yield on government bonds is 2.0% p.a., and the company tax rate is 28%. Calculate WACC HiLife Ltd's latest balance sheet shows a long-term debt of $30 million and shareholders' funds of $50 million. HiLife issued 10-year bonds exactly 7 years ago, each with a face value of $1,000 and an annual coupon rate of 9%. The coupon is paid annually at the end of each year. The bonds are currently trading at a yield of 6.0% p.a. HiLife has 50 million shares on issue and the current share price is $4.00. The company's share beta is 1.50, the market risk premium is estimated at 7.0% p.a., the yield on government bonds is 2.0% p.a., and the company tax rate is 28%. Calculate WACC
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To calculate the Weighted Average Cost of Capital WACC for HiLife Ltd we need to consider the cost of both debt and equity The WACC is the average rat... View the full answer
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