Question: Please include the formulas you used to find the solutions, thank you. Skye Computer Company: Balance Sheet as of December 31 (in thousands of dollars)

 Please include the formulas you used to find the solutions, thank

you. Skye Computer Company: Balance Sheet as of December 31 (in thousands

Please include the formulas you used to find the solutions, thank you.

Skye Computer Company: Balance Sheet as of December 31 (in thousands of dollars) 2021 Current assets $1,750 Net fixed assets 3,250 Total assets $5,000 Accounts payable and accruals Short-term debt Long-term debt Preferred stock Common stock Retained earnings Total common equity Total liabilities and equity $900 100 1,450 250 1,125 1,175 $2,300 $5,000 Last year's earnings per share Current price of common stock, Po Last year's dividend on common stock, Do Growth rate of common dividend, g Flotation cost for common stock, F Common stock outstanding Current price of preferred stock, Pp Dividend on preferred stock, D. Preferred stock outstanding Before-tax cost of debt, I'd Market risk premium, 'M- Risk-free rate, IRF Beta Tax rate Total debt $3.50 $50.00 $2.60 9% 10% 50,000 $30.00 $3.60 10,000 12% 4% 5% 1.732 25% $1,550 thousand a. Calculating the cost of each capital component (using the DCF method to find the cost of common equity) After-tax cost of debt Cost of preferred stock Cost of retained earnings Cost of new common stock b. Calculating the cost of common equity from retained earnings, using the CAPM method Cost of retained earnings C. Calculating the cost of new common stock based on the CAPM Flotation cost adjustment Cost of new common stock d. Calculating the firm's WACC assuming that (1) it uses only retained earnings for equity and (2) if it expands so rapidly that it must issue new common stock Market value (in thousands) Weight Total debt Preferred stock Common equity Total WACC1 WACC2 Skye Computer Company: Balance Sheet as of December 31 (in thousands of dollars) 2021 Current assets $1,750 Net fixed assets 3,250 Total assets $5,000 Accounts payable and accruals Short-term debt Long-term debt Preferred stock Common stock Retained earnings Total common equity Total liabilities and equity $900 100 1,450 250 1,125 1,175 $2,300 $5,000 Last year's earnings per share Current price of common stock, Po Last year's dividend on common stock, Do Growth rate of common dividend, g Flotation cost for common stock, F Common stock outstanding Current price of preferred stock, Pp Dividend on preferred stock, D. Preferred stock outstanding Before-tax cost of debt, I'd Market risk premium, 'M- Risk-free rate, IRF Beta Tax rate Total debt $3.50 $50.00 $2.60 9% 10% 50,000 $30.00 $3.60 10,000 12% 4% 5% 1.732 25% $1,550 thousand a. Calculating the cost of each capital component (using the DCF method to find the cost of common equity) After-tax cost of debt Cost of preferred stock Cost of retained earnings Cost of new common stock b. Calculating the cost of common equity from retained earnings, using the CAPM method Cost of retained earnings C. Calculating the cost of new common stock based on the CAPM Flotation cost adjustment Cost of new common stock d. Calculating the firm's WACC assuming that (1) it uses only retained earnings for equity and (2) if it expands so rapidly that it must issue new common stock Market value (in thousands) Weight Total debt Preferred stock Common equity Total WACC1 WACC2

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!