ABC is an all-equity firm that has 44,200 shares of stock outstanding at a market price of $14.70 per share. The firm is considering a capital structure with 53% debt at a rate of 5% and use the proceeds to repurchase shares. Determine the shares outstanding once the debt is issued. Hii tutor give me Answer

ABC is an all-equity firm that has 44,200 shares of stock outstanding at a market price of $14.70 per share. The firm is considering a capital structure with 53% debt at a rate of 5% and use the proceeds to repurchase shares. Determine the shares outstanding once the debt is issued. Hii tutor give me Answer

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 11P

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A company has the following balance sheet (market values): Liabilities + Equity Debt Equity Assets Cash Operating Assets 600 1000 400 1200 If the firm has 110. find the # of outstanding shares remaining after it repurchases 120 worth of shares: (round your answer to the nearest 0.01)
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You have been appointed as a financial consultant by the directors of Sizonke Holdings. They require you to determine 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 85 cents per share. A dividend growth of 14% was maintained for the past 5 years. ✓ 1 000 000 11%, R1 preference shares, with a market value of R2 per share. ✓ R1 000 000 9%, debentures due in 7 years and the current yield-to-maturity is 10%. ✓ R700 000 14%, bank loan, due in December 2019. Additional information: - The company has a tax rate of 28%. - The beta of the company is 1.6, a risk free rate of 6% and the return on the market is 15%. 2.1 Calculate the weighted average cost of capital. Use the Gordon Growth Model to calculate the cost of equity. 2.2 Calculate the cost of equity, using the Capital Asset Pricing Model.
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