B26 v fx 3.66 B C D E H 1 Capital Structure Information 4 5 Price 6 Source 7 Debt 8 Preferred 9 Common 10 Totals 11 12 13 Tax Rate 14 Coupon Rate 15 Face Value 16 Maturity 17 Yield to Maturity 18 19 20 21 Dividend 704.53 100.00 Please fill in the yellow boxes given the inforamtion to the left. These represent the current costs of financing 70.00 Additional Bond Data 30% 10% 1,000.00 10 Additional Preferred Data 10.00 22 Required Return 23 24 25 Additional Common Data 26 Dividend 0 27 Growth Rate 28 Required Retum 3.66 6%
B26 v fx 3.66 B C D E H 1 Capital Structure Information 4 5 Price 6 Source 7 Debt 8 Preferred 9 Common 10 Totals 11 12 13 Tax Rate 14 Coupon Rate 15 Face Value 16 Maturity 17 Yield to Maturity 18 19 20 21 Dividend 704.53 100.00 Please fill in the yellow boxes given the inforamtion to the left. These represent the current costs of financing 70.00 Additional Bond Data 30% 10% 1,000.00 10 Additional Preferred Data 10.00 22 Required Return 23 24 25 Additional Common Data 26 Dividend 0 27 Growth Rate 28 Required Retum 3.66 6%
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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Transcribed Image Text:The image displays a spreadsheet related to calculating the cost of capital for a firm. The spreadsheet is titled "Cost of Capital Case 3" and has tabs for different worksheets: "Required Return," "Market Value Weights," "WACC," "Marginal WACC," and "Capital Budget Decision."
### Spreadsheet Breakdown
**Table: Market Value Weights**
- **Columns:**
- Source
- Price
- Units
- Total Market Value
- % of Total
- **Rows:**
- Debt
- Price: $704.53
- Preferred Equity
- Price: 100.00
- Units: 1,000
- Common Equity
- Price: 70.00
### Notes:
There is a highlighted yellow section with instructions:
- **Book Values in Firm's Capital Structure:**
- Long Term Debt: $400,000 ($1000.00 par), Percent: 40%
- Preferred Equity: $100,000 (issue price $100.00), Percent: 10%
- Common Equity: $500,000 (issue price $50.00), Percent: 50%
- **Instructions:**
- Calculate the current market weights of the capital structure.
- Given the after-tax cost of each form of capital calculated on tab 1, find the current total market values for each form of capital.
- Complete the table with market value and market value % of total.
- Given the after-tax cost, calculate the Weighted Average Cost of Capital (WACC).
This spreadsheet is structured to help students understand how to calculate the weights of different forms of capital based on market values and prepare them to compute the WACC for financial analysis.
Transcribed Image Text:# Capital Structure Information
**Source and Price Details:**
- **Debt:**
- Price: $704.53
- **Preferred:**
- Price: $100.00
- **Common:**
- Price: $70.00
**Additional Bond Data:**
- **Tax Rate:** 30%
- **Coupon Rate:** 10%
- **Face Value:** $1,000.00
- **Maturity:** 10 years
- **Yield to Maturity:** (not provided)
**Additional Preferred Data:**
- **Dividend:** $10.00
- **Required Return:** (to be filled in)
**Additional Common Data:**
- **Dividend (D0):** $3.66
- **Growth Rate:** 6%
- **Required Return:** (to be filled in)
**Instructions:**
Please fill in the yellow boxes given the information to the left. These represent the current costs of financing.
**Tabs at the Bottom:**
1. Required Return
2. Market Value Weights
3. WACC (Weighted Average Cost of Capital)
4. Marginal WACC
5. Capital Budget Decision
This document appears to be a spreadsheet used for calculating various financial metrics related to the cost of capital and budgeting decisions for a company, focusing on debt, preferred stock, and common equity.
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