Your company has asked you to prepare a capital structure analysis based on the following information,...

  

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Your company has asked you to prepare a capital structure analysis based on the following information, Particulars Sohar Power Equity Beta 1.8 Yield on risk-free government securities 7% 5% Historic premium above the risk-free rate is estimate for shares Estimate of Cost of borrowed money to the company (before tax shield 8% benefits). Market value of the Firm - Scenario 1 Market value of the Firm - Scenario 2 Equity - 60% Debt-40% Equity - 80% Debt-20% 30% Corporation tax You are advised prepare a report as follows, A. Estimate the Equity cost of capital using CAPM. (7 marks) B. Calculate the cost of Debt after tax. (7 marks) C. Ascertain an estimate of the weighted average cost of capital (WACC) for both scenarios. (11 marks) Prepare a report by covering the following points by reviewing relevant academic literature and appropriately citing and referencing the literature sources, D. Explain the Capital Structure by highlighting FOUR features of Capital Structure with suitable examples. (20 marks) (word range - 350-400 words) E. Justify which scenario is in better in terms of Capital Structure for the company. (5 marks) (Word range - 100-150 words) Your company has asked you to prepare a capital structure analysis based on the following information, Particulars Sohar Power Equity Beta 1.8 Yield on risk-free government securities 7% 5% Historic premium above the risk-free rate is estimate for shares Estimate of Cost of borrowed money to the company (before tax shield 8% benefits). Market value of the Firm - Scenario 1 Market value of the Firm - Scenario 2 Equity - 60% Debt-40% Equity - 80% Debt-20% 30% Corporation tax You are advised prepare a report as follows, A. Estimate the Equity cost of capital using CAPM. (7 marks) B. Calculate the cost of Debt after tax. (7 marks) C. Ascertain an estimate of the weighted average cost of capital (WACC) for both scenarios. (11 marks) Prepare a report by covering the following points by reviewing relevant academic literature and appropriately citing and referencing the literature sources, D. Explain the Capital Structure by highlighting FOUR features of Capital Structure with suitable examples. (20 marks) (word range - 350-400 words) E. Justify which scenario is in better in terms of Capital Structure for the company. (5 marks) (Word range - 100-150 words)