What is the WACC of ordinary share? Supporting information - Ordinary shares ($2 par), cost =...
- What is the WACC of ordinary share?
- Supporting information - Ordinary shares ($2 par), cost = 500,000,000, Ordinary shares are currently trading at $2.20. A dividend of 20c has just been paid, fully franked. The dividend is expected to grow at a rate of 4%pa for the foreseeable future.
Homework Answers
WACC of ordinary share=Last Dividend*(1+growth rate)/Current
Price+growth rate=0.20*1.04/2.20+4%=13.455%
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What is the WACC of ordinary share?
Supporting information - Ordinary shares ($2 par), cost =...
how did the tutor arrive at 0.2686?? the supporting information: 2$ par, cost 500,000,000, trading for...
how did the tutor arrive at
0.2686??
the supporting information: 2$ par, cost 500,000,000, trading
for 2.20, dividend of 20cents, growth rate 4%
C- tCu) 4 Ve ) 16-7
(b) Calculate the WACC for the following firm: Debt: 40,000 bonds with coupon rate of 5%...
(b) Calculate the WACC for the following firm: Debt: 40,000 bonds with coupon rate of 5% paid annually and face value of $100. The bonds are currently trading for $85 each and have 10 years until maturity. The yield to maturity of the bonds is 7.15% p.a. before tax. Common stock: 150,000 ordinary shares currently trading for $50 per share. The most recent dividend from the stock has been $5 per share and the dividend is expected to grow at...
(b) Suppose a Spanish investor is considering the following investments: Investment A: This is the ordinary...
(b) Suppose a Spanish investor is considering the following investments: Investment A: This is the ordinary share of a matured company. The market price for this security is €40 per share. The company is expected to pay €4 dividend per share one year from now and its expected growth rate for foreseeable future is 4%. Investment B: This is the ordinary share of a fast-growing company. The market price for this security is €40 per share. The company expects to...
DHL’s shares are currently trading at R35 a share. The shares are expected to pay a...
DHL’s shares are currently trading at R35 a share. The shares are expected to pay a dividend of R4 a share at the end of the year (D1 = R4), and the dividend is expected to grow at a constant rate of 5 percent a year. Required: Calculate the cost of its equity.
elation ategory 2 company capial) Compute the cost for the following sources of financing. (a) Debt...
elation ategory 2 company capial) Compute the cost for the following sources of financing. (a) Debt that has a $100 par value (face value) and a contractor coupon interest rate of 11% retained prohts if the company tax rates 30%. 14-1(dividual or component costs of ssume a company tax rate of 30%. A new issue would have issue costs of 5% of the $112.50 market value. The debt matures in 10 years (b) A new ordinary share issue that paid...
iridas or Component casts of capital) Compute the cost for the following sources of financing. company...
iridas or Component casts of capital) Compute the cost for the following sources of financing. company tax rate of 30% Debt that has a $100 par value (face value) and a contract or coupon interest rate of 11% A new issue would have issue costs of 5% of the $112.50 market value. The debt matures in 10 years. (b) A new ordinary share issue that paid an 18 cents dividend last year. Earnings per share have grown at a rate...
(a) Brandon is considering three investments: bond, preference share and ordinary share. The bond has a...
(a) Brandon is considering three investments: bond, preference share and ordinary share. The bond has a RM1,000 par value, pays interest semi-annually at 11% and maturing in 8 years. Other bonds of the similar risk level are providing 10% rate of return. The bond is currently selling at RM1,250. Meanwhile, the preference share (RM100 par value) is selling for RM98 and pays an annual dividend of RM12.50. Brandon’s required rate of return is 14% for preference share and 20% for...
ST-1 Jldividual costs of capital) Compute the cost for the following sources o (a) A $100...
ST-1 Jldividual costs of capital) Compute the cost for the following sources o (a) A $100 par-value bond with a market price of $97 Costs and a coupon interest rate of 10% e bonds mature in 10 years and the corpo (b) Preference shares selling for $10 with an annual unfranked dividend payment of 80 cents. (c) Internally generated equity totalling $4.8 million. The price of ordinary shares is $7.50 per for a new issue would be approximately 5%. T...
Underestimated Ltd’s ordinary shares currently sell for $36 per share. The company believes that its shares...
Underestimated Ltd’s ordinary shares currently sell for $36 per share. The company believes that its shares should really sell for $54 per share. If the company just paid an annual dividend of $2 per share and the company expects those dividends to increase by 8 per cent per year forever (and this is common knowledge to the market), what is the current cost of ordinary equity for the company and what does the company believe is a more appropriate cost...
An extract from the Statement of Financial Position as at 31 March 2012 for Easy FM...
An extract from the Statement of Financial Position as at 31 March 2012 for Easy FM Radio Station is as follows: 6% Secured Bonds (par $1000) $ 400,000 Long Term Loans $ 500,000 7% Preference Shares (par $2) $ 250,000 Issued & Paid up ordinary shares ($1 par) $1,000,000 Retained Earnings $2,350,000 Other information: The current market price for the bonds that will mature on 31 March 2019 is $875 each. The interest rate on an equivalent long term loan...
how did the tutor arrive at
0.2686??
the supporting information: 2$ par, cost 500,000,000, trading
for 2.20, dividend of 20cents, growth rate 4%
C- tCu) 4 Ve ) 16-7
(b) Calculate the WACC for the following firm: Debt: 40,000 bonds with coupon rate of 5% paid annually and face value of $100. The bonds are currently trading for $85 each and have 10 years until maturity. The yield to maturity of the bonds is 7.15% p.a. before tax. Common stock: 150,000 ordinary shares currently trading for $50 per share. The most recent dividend from the stock has been $5 per share and the dividend is expected to grow at...
(b) Suppose a Spanish investor is considering the following investments: Investment A: This is the ordinary share of a matured company. The market price for this security is €40 per share. The company is expected to pay €4 dividend per share one year from now and its expected growth rate for foreseeable future is 4%. Investment B: This is the ordinary share of a fast-growing company. The market price for this security is €40 per share. The company expects to...
elation ategory 2 company capial) Compute the cost for the following sources of financing. (a) Debt that has a $100 par value (face value) and a contractor coupon interest rate of 11% retained prohts if the company tax rates 30%. 14-1(dividual or component costs of ssume a company tax rate of 30%. A new issue would have issue costs of 5% of the $112.50 market value. The debt matures in 10 years (b) A new ordinary share issue that paid...
iridas or Component casts of capital) Compute the cost for the following sources of financing. company tax rate of 30% Debt that has a $100 par value (face value) and a contract or coupon interest rate of 11% A new issue would have issue costs of 5% of the $112.50 market value. The debt matures in 10 years. (b) A new ordinary share issue that paid an 18 cents dividend last year. Earnings per share have grown at a rate...
ST-1 Jldividual costs of capital) Compute the cost for the following sources o (a) A $100 par-value bond with a market price of $97 Costs and a coupon interest rate of 10% e bonds mature in 10 years and the corpo (b) Preference shares selling for $10 with an annual unfranked dividend payment of 80 cents. (c) Internally generated equity totalling $4.8 million. The price of ordinary shares is $7.50 per for a new issue would be approximately 5%. T...
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