The following data refers to Company Z: - Beta = 1.7 - Required return on debt (yield
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Question:
The following data refers to Company Z:
- Beta = 1.7
- Required return on debt (yield to maturity on a long term bond) = 3.1%
- Tax rate = 21%
- 30-year government bond = 2.3%
- Market risk premium can be assumed to be 5%
Current Capitalization (Millions of USD) | |
Currency | Million USD |
Shares Price | $ 10.7 |
Shares Outstanding | 58.2 |
Market Capitalization | 622.7 |
- Cash & Short Term Investments | 10.2 |
+ Total Debt | 422.0 |
+ Pref. Equity | - |
+ Total Minority Interest | - |
=Total Enterprise Value (TEV) | 1,034.5 |
Book Value of Common Equity | 237.0 |
+ Pref. Equity | - |
+ Total Minority Interest | - |
+ Total Debt | 422.0 |
Total book capital | 659.0 |
Estimate the cost of capital (WACC) for Company Z. | |
WACC = |
Related Book For
Fundamentals of Cost Accounting
ISBN: 978-1259565403
5th edition
Authors: William Lanen, Shannon Anderson, Michael Maher
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