Jangga Corp. is a publicly-listed food and beverage company that has been operating for more than...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Jangga Corp. is a publicly-listed food and beverage company that has been operating for more than 20 years. It is currently considering to open a new branch in South Jakarta, and as a business analyst, you are asked to conduct a feasibility study of this business plan. One of your main tasks is to calculate the weighted average cost of capital (WACC) that will be used for the capital budgeting analysis for this project, which has a similar level of risk with the overall company. Based on the available data, currently the risk-free rate is 4.X%, and the market risk premium is 12%. The company's beta is I.Y. The last closing price per share is IDR 7.500, and there is a total of 12,000,000 shares outstanding. The company's debt consists of bond that is quoted 110%, with a par value of IDR 100,000,000 and time to maturity of 12 years. The number of total bond outstanding is 500. The coupon rate is 10% p.a., and the coupon is paid semi-annually. Company's tax rate is 25%. Based on the information above: a. Calculate the company's cost of equity b. Calculate the cost of debt c. Calculate the total market value of equity and debt d. Calculate the company's weighted average cost of capital. Jangga Corp. is a publicly-listed food and beverage company that has been operating for more than 20 years. It is currently considering to open a new branch in South Jakarta, and as a business analyst, you are asked to conduct a feasibility study of this business plan. One of your main tasks is to calculate the weighted average cost of capital (WACC) that will be used for the capital budgeting analysis for this project, which has a similar level of risk with the overall company. Based on the available data, currently the risk-free rate is 4.X%, and the market risk premium is 12%. The company's beta is I.Y. The last closing price per share is IDR 7.500, and there is a total of 12,000,000 shares outstanding. The company's debt consists of bond that is quoted 110%, with a par value of IDR 100,000,000 and time to maturity of 12 years. The number of total bond outstanding is 500. The coupon rate is 10% p.a., and the coupon is paid semi-annually. Company's tax rate is 25%. Based on the information above: a. Calculate the company's cost of equity b. Calculate the cost of debt c. Calculate the total market value of equity and debt d. Calculate the company's weighted average cost of capital.
Expert Answer:
Answer rating: 100% (QA)
a Calculation of the Cost of Equity The cost of equity can be calculated using the Capital Asset Pri... View the full answer
Related Book For
Business and Administrative Communication
ISBN: 978-0073403182
10th edition
Authors: Kitty o. locker, Donna s. kienzler
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...
-
You are required to study the information provided below concerning a Namibian listed company called Deep Yellow Limited, that operates in the mining industry. You should compile a report based on...
-
Your team of four people form a financial analysis team at Aussie Finance Consulting (AFC), a renowned financial institution. The executive management of AFC has assigned you a task to carry out a...
-
A curve has equation y = x 2 ln 3x. Find the value of dy/dx and d 2 y/dx2 at the point where x = 2.
-
An aircraft manufacturer wants to determine the best selling price for a new airplane. The company estimates that the initial cost of designing the airplane and setting up the factories in which to...
-
An electron moving parallel to the x axis has an initial speed of 3.70 % 106 m/s at the origin. Its speed is reduced to 1.40 x 105 m/s at the point x = 2.00 cm. Calculate the potential difference...
-
Recall, a lis pendens is a notice of pending action. Research where you would record a lis pendens in California. Are there any special requirements for filing a lis pendens? Does a lis pendens...
-
During 2011, Stanton Corporation reported after-tax net income of $3,600,000. During the year, the number of shares of stock outstanding remained constant at 10,000 of $100 par, 9 percent preferred...
-
Reflect on three opinions that you have, that you hold moderate confidence in. List them, and reasoning to support that opinion. Rate each opinion from 1-10 ( 1 being least, 10 being most) on how...
-
Using the Public MACRO BITCOIN scorecard spreadsheet (linked in its associated masterclass lesson - Long Term 32), create a COPY of it and perform a complete analysis for the date 22/2/2022....
-
Fairmount Corporation produces and sells a single product. Data concerning that product appear below: per unit percent of sales Selling price $ 120 100 % Variable costs 36 30 % Contribution margin $...
-
Define social media. ( 20 points ) How has social media changed the way marketers and consumers communicate with one another? Explain the implications for marketers. Describe how marketing managers...
-
If the amount in Supplies Expense is the January 31 adjusting entry, and $850 of supplies was purchased in January, what was the balance in Supplies on January 1? Beginning balance of supplies $
-
Jenny Abrams serves as the health care administrator at Brookside Hospital, a privately owned,250-bed facility located in a rural town in West Virginia. It is 7:00 a.m. on a Thursday, and Ms.Abrams...
-
Indigo Delights manufactures a wide variety of holiday and seasonal decorative items. Indigo's activity-based costing overhead rates are: Purchasing $401 per order Storing $2 per square foot/days...
-
Ricky's Piano Rebuilding Company has been operating for one year. On January 1, at the start of its second year, its income statement accounts had zero balances and its balance sheet account balances...
-
Go to the National Cancer Institute at https://epi grants.cancer.gov/registries.html to access links to the national and state cancer registries. Pick a state and view the information on the state's...
-
For the next several days, take notes on your listening performance during at least a half-dozen situations in class, during social activities, and at work, if applicable. Referring to the traits of...
-
How can you adapt good style to organization preferences?
-
Revise each of these sentences to improve you-attitude and positive emphasis. You may need to add information. 1. I understand that your company has had problems due to the mistranslation of...
-
What are some techniques for making meetings effective?
-
Define a financial forecast.
-
How does a financial projection differ from a financial forecast?
-
What is the CPA's purpose in examining a financial forecast or projection?
Study smarter with the SolutionInn App