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4. You are a member of the finance staff of Orange Ltd, whose share are listed on London Stock Exchange. You have been asked to derive a weighted average cost of capital (WACC) for use in assessing a major investment in a training facility. The business’s financial statement as at 31 December 2021 shows that it has the following long-term financial capital structure: Redeemable Debt: 5,000 redeemable debts of £100 each with 12% coupon rate Preference Shares: 46,000 shares with 9% dividend rate and a par value of £10 Ordinary shares: 0.5 million shares of £1 each On 31 December 2021, the 12% redeemable debt is traded at £114 (ex-interest). It will be redeemable at par on 31 December 2022. Interest on the debt is payable annually on 31 December. On 31 December 2021, the market price of the company’s 9% preference shares is £13.5 (cum-dividend). On 31 December 2021, the ordinary shares are quoted at £1.21 each. The ordinary shareholders will receive a 7p annual dividend per share very…

As the CFO of your company, you want to determine the rate your company must require for capital investment projects. You have gathered the following information about the various funding sources and market conditions.     Debt: 23,000 bonds. 7.2 annual% coupon, with semiannual payments.  $1,000 face value.  19 years to maturity.  Priced at $1,060 per bond.   Preferred stock: 25,000 shares preferred stock.  Priced at $95 per share.  $5.00 dividend per share.   Common Stock: 560,000 shares.  Priced at $74 per share.  Beta is 1.17.   Market: 7% market risk premium.  5.1% risk-free rate.  Company’s tax rate is 23%.   What is the company's Weighted Average Cost of Capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 12.34.

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Question 4 Global Internet company is looking to expand their operations. They are evaluating their cost of capital based on various financing options. Investment bankers informed them that they can issue new debt in the form of bonds at a cost of 8%, and issue new preferred stocks for the price of $25 per share paying $2.5 dividends per share. Their common stock is currently selling for $20 per share and will pay a dividend of $1.5 per share next year. They expect a growth rate in dividends of 5% per year, and their marginal tax rate is 35%. a) If Global raises capital using 45% debt, 5% preferred stock, and 50% common stock what is their cost of capital? b) If Global raises capital using 30% debt, 5% preferred stock, and 65% common stock what is their cost of capital? c) Evaluate the two finance options and identify which one they should choose? Assess the advantages and disadvantages of your choice?

1. Stockholders: a. Elect the board of directors b. Are active in day to day management of the firm c. All of the above d. Each have one vote at the annual meeting You are considering borrowing $100,000 for 30 years at a compound annual interest rate of 9%.The loan agreement calls for 30 equal annual payments, to be paid at the end of each of the next 30 years. What is the annual payment that will fully amortize the loan? 2. Select one: a. $6,400.30 b. $8,423.33 c. $9,733.63 d. $12,333.33 e. $3,333.33   3. A stakeholder is:    a. a person who initially founded a firm and currently has management control over that firm. b. a creditor to whom a firm currently owes money. c. any person or entity other than a stockholder or creditor who potentially has a claim on the cash flows of a firm. d. a person who owns shares of stock.

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Give typing answer with explanation and conclusion A financial analyst is calculating the theoretical value or target price that company A's share should have. Its share is currently trading at $100 usd in the market, it has 5 million shares outstanding. Total assets amount to $700 million. Total liabilities are 50% of assets and your debt is 40% of liabilities. It does not have minority capital and the balance in cash and short-term investments is $7 million. Asset turnover is 1.2x and the EBITDA margin is 20%. If the EV to EBITDA multiple of the sector where the company operates is with a median of 5x and an average of 7x. What should the share price be?

Crow Academy leadership wants to know its WACC given its current capital structure. The capital structure data is as follows. Equity: 2,843,200 shares outstanding, price $18.59, stock beta 0.96. Preferred stock: 675,000 shares outstanding, price $21.74, fixed dividend $0.75. Debt: 242,000 zero annual coupon bonds issued, price is 38% of par, 15 years to maturity. If the current market return is 14.28%, the risk-free rate is 3.18%, and the tax rate is 21%, what is the company's weighted average cost of capital (WACC)?

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Question 1:Suppose Your Company where you work as Finance Director is Financed by both debt (bonds) and equity (shares). In the Board Meeting, it was agreed that you needed to raise extra funds for capital Expenditure (Kn1 Million). Since your company is listed on the Lusaka Stock Exchange, you sold 400 worth of bonds at Kn1,000 each at 5% coupon rate (A total of Kn 400,000 raised). The company further issued stocks (shares) totaling 6,000 at Kn 100 each with an expected return of 6% (cost of equity). The company therefore managed to raise the required amount of Kn 1, 000,000 for the desired capital expenditure.Assume Corporate Tax Rate is 35%. REQUIRED:i) Explain in detail what is meant by the weighted average cost of capital         (WACC) ii) Calculate the Weighted Average Cost of Capital (WACC) for your                  company. iii) What do you think are the major roles of a Corporate Finance Director         in the ModernTimes?

S Examine the following book-value balance sheet for University Products Incorporated. The preferred stock currently sells for $15 per share and pays a dividend of $3 a share. The common stock sells for $10 per share and has a beta of 0.9. There are 4 million common shares outstanding. The market risk premium is 8%, the risk-free rate is 4%, and the firm's tax rate is 21%. Assets Cash and short-term securities $ 3.0 Accounts receivable. 3.0 Inventories Plant and equipment Total 7.0 25.0 $ 38.0 a. Market debt-to-value ratio b. WACC BOOK-VALUE BALANCE SHEET (Figures in 5 millions) Liabilities and Net Worth Bonds, coupon 5%, paid annually (maturity 10 years, current yield to maturity = 7%) Preferred stock (par value $20 per share) Common stock (par value $0.10) Additional paid-in stockholders' equity Retained earnings Total a. What is the market debt-to-value ratio of the firm? b. What is University's WACC? Note: For all the requirements, do not round intermediate calculations. Enter your…

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Finance You have been appointed as a financial consultant by the directors of Chennai Holdings. They require you to calculate the cost of capital of the company. The following information is available on the capital structure of the company: • 1 500 000 Ordinary shares, with a market price of R3 per share. The latest dividend declared was 90 cents per share. A dividend growth of 13% was maintained for the past 5 years. • 1 000 000 12%, R1 Preference shares with a market value of R2 per share. • R1 000 000 Debentures due in 7 years with a current market value of R 951 356 and • a before tax cost of 10% • R900 000 14% Bank loan, due in December 2016 Additional information: 1. The company has a tax rate of 30%. 2. The beta of the company is 1.7, a risk free rate of 7% and the return on the market is 15%. Required: 1.1 Calculate the weighted average cost of capital (WACC). Use the Gorden Growth • Model to calculate the cost of equity. (17) 1.2 Calculate the cost of equity, using the…

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Question 2 Robert Bernard is an investment analyst employed to JMMB. He was requested to assess the capital structure of Worthy Park Estate Rums and has provided the following information: Preferred Stock: 13 000 shares of 8 percent preferred stock issued at $100.00 per share. Current market price is $80 per share. Common Stock: 60 000 shares outstanding, selling for $105 per share. The current treasury bill rate is 12% and the stock's beta is 1.50. The expected rate of return on the average stock in the market is 16%. Debt The firm can borrow funds at 23% interest per year. Assume that the tax rate is 30%. a. Using the information above to calculate the firm's WACC if the target capital structure comprises 40% debt, 20% preferred stock and 40% common stock. b. If the beta of the stock was two (2) and the firm's capital structure was modified to 40% debt, 10% preferred stock, and 50% common, what is the firm's WACC? c. The firm is expected to pay a year end dividend of $10.00 per share…

You are an investment adviser. One of your clients approaches you for your advice on investing in equity shares of Alpha Company. You have collected the following data: Earnings per share last year $6.00 Payout ratio 0.40 Return on equity 0.30 Cost of equity capital 0.20 The company plans to increase the payout ratio to 60% from year 5. Required: i) Estimate the price of an equity share of this company using an appropriate dividend discount model and advise your client whether they should buy a share of the company. ii) Your client is keen to know whether there are any positive growth opportunities from their investment. Explain to your client the meaning of this concept using appropriate calculations. Notes: You need to show detailed calculations in order to receive full marks for this question iii)If there are positive or negative growth opportunities, explain the reason for such opportunities.

Subject: Financial strategy & policy Question No 3   (part i)                                                                            Answer the following. i) The future earnings, dividends, and common stock price of Nabeel Inc. are expected to grow 7% per year. Common stock currently sells for $23.00 per share; its last dividend was $2.00. a) Using the DCF approach, what is its cost of common equity? b) If the firm’s beta is 1.6, the risk-free rate is 9%, and the average return on the market is 13%, what will be the firm’s cost of common equity using the CAPM approach? c) If the firm’s bonds earn a return of 12%, based on the bond-yield-plus-risk-premium approach, what will be rs? d) If you have equal confidence in the inputs used for the three approaches, what is your estimate of cost of common equity?

What is the weighted-average cost of capital for SKYE Corporation given the following information? 1 million Equity shares outstanding. Stock price per share Yield to maturity on debt Book value of interest-bearing debt Coupon interest rate on debt Interest rate on government bonds SKYE's equity beta Historical excess return on stocks Tax rate Note: Enter your answer to 1 decimal place. Weighted-average cost of capital % $ 20 7.68% $11 million 98 3% 0.75 5.5% 45%

You are an investment adviser. One of your clients approaches you for your advice on investing in equity sharesof Alpha Company. You have collected the following data:Earnings per share last year $5.00Payout ratio 0.30Return on equity 0.30Cost of equity capital 0.25The company plans to increase the payout ratio to 40% from year 6.Required:i) Estimate the price of an equity share of this company using an appropriate dividend discount modeland advise your client whether they should buy a share of the company.ii) Your client is keen to know whether there are any positive growth opportunities from theirinvestment. Explain to your client the meaning of this concept using appropriate calculations.

3. (a): The stock price for Bank Muscat was OMR 100 per share one year ago. The stock is currently trading at OMR 92 per share. Shareholders just received OMR 20 as dividend. Calculate the "Return" was earned over the past year? (b): First find W, and then calculate the "Weighted average" cost of capital of a Company from the following table details: Capital Component Amount WCost Debt Preferred Stock Common Stock 40,000 5% 30,000 6% 50,000 4%

What is the weighted average cost of capital for SKYE Corporation given the following information? Equity shares outstanding 1 million Stock price per share $ 23 Yield to maturity on debt 7.68% Book value of interest - bearing debt $14 million Coupon interest rate on debt 9% Interest rate on government bonds 7% SKYE's equity beta 0.75 Historical excess return on stocks 5.8% Tax rate 40% Note: Enter your answer to 1 decimal place.

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A Corporation will pay a dividend of $2.85 per share next year. The company pledges to increase its dividend by 9.1 percent per year, indefinitely. If you require a return of 21 percent on your investment, how much will you pay for the company's stock today? Select one: a.$23.95 b.$38.12 c.$23.38 d.$38.89

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