3) AzerTurk Company currently has 1.2 million common shares of stock outstanding and the stock has a beta of 1.5. It also has $10 million face value of bonds that matures .* and 7 % coupon with annual payments and are priced to yield 14%. Use actual/actual convention method. Settlement date is 8 April 2021. If AzerTurk issues up to $ 2,500,000 of new bonds, the bonds will be priced at par and have a yield of 14 %; if it issues bonds beyond $2,500,000, the expected yield on the entire issuance will be 15 %. AzerTurk has known that market value of its shares is traded at the value of $10 a share and the new shares can be sold at the same price. The current risk-free rate is 3 % and the expected market return is 10 %. AzerTurk's tax rate is 30 %. What is the WACC if AzerTurk raises $7.5 million of new capital (both equity and debt) while maintaining the same debt-to-equity ratio. * Use your ID number. 8 April 2021 + Your ID number as number of days Example ID number = 9876 than maturity date => 8 April 2021 + 9876 days = 22 April 2048
3) AzerTurk Company currently has 1.2 million common shares of stock outstanding and the stock has a beta of 1.5. It also has $10 million face value of bonds that matures .* and 7 % coupon with annual payments and are priced to yield 14%. Use actual/actual convention method. Settlement date is 8 April 2021. If AzerTurk issues up to $ 2,500,000 of new bonds, the bonds will be priced at par and have a yield of 14 %; if it issues bonds beyond $2,500,000, the expected yield on the entire issuance will be 15 %. AzerTurk has known that market value of its shares is traded at the value of $10 a share and the new shares can be sold at the same price. The current risk-free rate is 3 % and the expected market return is 10 %. AzerTurk's tax rate is 30 %. What is the WACC if AzerTurk raises $7.5 million of new capital (both equity and debt) while maintaining the same debt-to-equity ratio. * Use your ID number. 8 April 2021 + Your ID number as number of days Example ID number = 9876 than maturity date => 8 April 2021 + 9876 days = 22 April 2048
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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My id is 11396
Transcribed Image Text:3) AzerTurk Company currently has 1.2 million common
shares of stock outstanding and the stock has a beta of 1.5.
It also has $10 million face value of bonds that matures
.* and 7 % coupon with annual payments and are
priced to yield 14%. Use actual/actual convention method.
Settlement date is 8 April 2021.
If AzerTurk issues up to $ 2,500,000 of new bonds, the
bonds will be priced at par and have a yield of 14 %; if it
issues bonds beyond $2,500,000, the expected yield on the
entire issuance will be 15 %. AzerTurk has known that
market value of its shares is traded at the value of $10 a
share and the new shares can be sold at the same price. The
current risk-free rate is 3 % and the expected market return
is 10 %. AzerTurk's tax rate is 30 %.
What is the WACC if AzerTurk raises $7.5 million of new
capital (both equity and debt) while maintaining the same
debt-to-equity ratio.
* Use your ID number. 8 April 2021 + Your ID number as
number of days
Example ID number = 9876 than maturity date
=> 8 April 2021 + 9876 days = 22 April 2048
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