Question: Question 5 Environ4Us Ltd has the following capital structure. Value Cost of funds Debt 120,000,000 3.5% Equity 180,000,000 11.0% Calculate the weighted average cost of

Question 5

Environ4Us Ltd has the following capital structure.

Value Cost of funds
Debt 120,000,000 3.5%
Equity 180,000,000 11.0%

  1. Calculate the weighted average cost of capital for Environ4Us Ltd.

Environ4Us Ltd is planning to restructure. This will involve buying back $100,000,000 worth of shares and selling $100,000,000 worth of bonds (debt).

  1. Calculate the weighted average cost of capital for Environ4Us Ltd after the firm has changed their capital structure.

  1. State what has happened to the weighted average cost of capital with the restructure and why.

  1. What impact will this have on the net present value of the future cash flows for any project Environ4US Ltd undertakes?

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 Economics Questions!

Q:

Some recent financial statements for Smolira Golf, Inc., follow. Find the following financial ratios for Smolira Golf (use year-end figures rather than average values where appropriate): (Do not...

Q:

Question 5 Environ4Us Ltd has the following capital structure. Value Cost of funds Debt 120,000,000 3.5% Equity 180,000,000 11.0% (a) Calculate the weighted average cost of capital for Environ4Us...

Q:

Question 5 Environ4Us Ltd has the following capital structure. Value Cost of funds Debt 120,000,000 3.5% Equity 180,000,000 11.0% (a) Calculate the weighted average cost of capital for Environ4Us...

Q:

Question 5 Environ4Us Ltd has the following capital structure. Value Cost of funds Debt 120,000,000 3.5% Equity 180,000,000 11.0% (a)Calculate the weighted average cost of capital for Environ4Us Ltd....

Q:

Hi There, I just got feedback from an assignment I submitted and got answer (b). of the following question incorrect. I have left my answer there so that you can see where I have gone wrong. Could...

Q:

Environ4Us Ltd has the following capital structure. Value Cost of funds Debt 120,000,000 3.5% Equity 180,000,000 11.0% Calculate the weighted average cost of capital for Environ4Us Ltd. Environ4Us...

Q:

Page 1 FIN 610 Team Project Title: Financial Analysis Tasks Responding to the Controller Introduction: You are a financial analyst at the Stirm Windows Company. After the Monday morning staff meeting...

Q:

Work out question 3, information starts from the first page, the question is on top of the second page 2.2 2.1.1. Earnings Yield 2.1.2 Dividend Yield, 2.1.3. PE Ratio List four most important factors...

Q:

There are answers with "Answer: See Chapter 9 Mini Case Show" so i need the answer for all those questions please. Thanks 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29...

Q:

Please, I need help with the calculations for the following 25 problems in the "final" tab of the workbook before 9pm CST. FINC 340 Quizzes 1 2 Derivatives can be strictly defined as Financial...

Q:

All multiple question, major in Hospitality management. 4. The advisors to Creative Bliss Enterprises, the Marx Brothers, ask you to join them as they interview their first potential underwriting...

Q:

You are the marketing manager for the biggest supplier of local fresh milk and imported UHT milk in your county with a market share of 80% for UHT milk and 100% for local fresh milk over the past 10...

Q:

In a game of craps, you roll two fair dice. Whether you win or lose depends on the sum of the numbers appearing on the tops of the dice. Let x be the random variable that represents the sum of the...

Q:

What do you mean by Financial Management ? How has financial management evolved as a discipline ? Should the goal of financial decision - making be profit maximisation or wealth maximisation ?...

Q:

The U. S. Department of Transportation maintains statistics for mishandled bags per 1,000 airline passengers. In October 2013, Delta mishandled 1.55 bags per 1,000 passengers. What is the probability...

Q:

Why would HP use more than one marketing channel?

Q:

Listed below is the 10-year, per-share performance record of Larry, Moe, & Curley's Growth Fund, as obtained from the fund's May 30, 2016, prospectus. Use this information to find LM&C's holding...

Q:

In June 2015, Karen transferred property with a $75,000 FMV and a $20,000 adjusted basis to Hal, her husband. Hal dies in March 2016; the property has appreciated to $85,000 in value by then. His...

Q:

Listed below is the 10-year, per-share performance record of Larry, Moe, & Curleys Growth Fund, as obtained from the funds May 30, 2014, prospectus: Use this information to find LM&Cs holding period...

Q:

A product must measure 100.88cm. If the process has a standard deviation of 0.20 cm, what is the sigma-rating of the process? (Round your answer to THREE places of decimal)

Q:

2. In this chapter, the reader should reflect on the following concepts: Context, winwin, win-lose, ambiguity, mental model, point of reference.

Q:

2. In this chapter, the reader should reflect on the following concepts: Patterns, symmetrical relationships, complementary relationships.

Q:

1. To provide insight into how setting an overly narrow boundary can give a mes-sage a specific meaning, while setting a wider boundary can give a completely different meaning.