Question: I do not understand the question below because the solved answer was given in excel. I am not that familiar with excel . Please explain
I do not understand the question below because the solved answer was given in excel. I am not that familiar with excel . Please explain step by step by hand calculations so that I have a better understanding. Thank you.
Question:
Timco shares are currently valued at 53 each.There are 2M outstanding.Last year, the dividend was 2 but we expect it to grow at 8% forever.Net income is expected to be 10M.The firm uses 40% debt in their capital structure.They can borrow more at 4%. The tax rate is 35%.New shares can be sold for 6% flotation costs.Find the breakpoint and the WACC before and after.
Answer:
In excel:
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