Western Electric has 35,000 ordinary shares outstanding at a price per share of $47 and a...
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Western Electric has 35,000 ordinary shares outstanding at a price per share of $47 and a rate of return of 13.5%. The firm has 5,000 preference shares paying 7% dividend outstanding at a price of $58 a share. The preferred share has a par value of $100. The outstanding bond has a total face value of $450,000 and currently sells for 102% of face. The pre-tax yield-to-maturity on the bond is 8.499%. Required: a) Calculate the total market value of the firm. b) Calculate the capital structure of the firm. (Please round up the result at 3 decimal places) c) Calculate the firm's weighted average cost of capital if the tax rate is 30%, assuming a classical tax system. Western Electric has 35,000 ordinary shares outstanding at a price per share of $47 and a rate of return of 13.5%. The firm has 5,000 preference shares paying 7% dividend outstanding at a price of $58 a share. The preferred share has a par value of $100. The outstanding bond has a total face value of $450,000 and currently sells for 102% of face. The pre-tax yield-to-maturity on the bond is 8.499%. Required: a) Calculate the total market value of the firm. b) Calculate the capital structure of the firm. (Please round up the result at 3 decimal places) c) Calculate the firm's weighted average cost of capital if the tax rate is 30%, assuming a classical tax system.
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Answer rating: 100% (QA)
Debt Face Value of Debt 450000 Market Value of Debt 102 450000 Market Value of Debt 459000 Pretax Co... View the full answer
Related Book For
Fundamentals of corporate finance
ISBN: 978-0470876442
2nd Edition
Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates
Posted Date:
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