Additional Information: i. The Long-Term debt consists of 8% annual coupon bonds, with 15 years to maturity and are currently selling for 95% of par. ii. The company’s common shares which have a book value of $20 per share are currently selling at $25 per share. iii. Preferred shares have a book value of $100 per share. These shares are currently selling at $120 per share and pays dividends of 6% per annum on book value. iv. The dividend growth rate is expected to be 3%, and dividend for 2023 is projected to be $5.00 per share. v. The Company’s Tax rate is 30%. Required: Determine the following for Tram-Ropes Limited: A. Total Market value of the firm’s capital structure B. After-tax Cost of Debt C. Cost of Common Stock D. Cost of Preferred Stock E. WACC Please show working (no spreadsheets)
Additional Information:
i. The Long-Term debt consists of 8% annual coupon bonds, with
15 years to maturity and are currently selling for 95% of
par.
ii. The company’s common shares which have a book value of $20
per share are currently selling at $25 per share.
iii.
shares are currently selling at $120 per share and pays
dividends of 6% per annum on book value.
iv. The
for 2023 is projected to be $5.00 per share.
v. The Company’s Tax rate is 30%.
Required:
Determine the following for Tram-Ropes Limited:
A. Total Market value of the firm’s capital structure
B. After-tax Cost of Debt
C. Cost of Common Stock
D. Cost of Preferred Stock
E. WACC


Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 4 images









