Badidap Co., a company with a 25% debt-to-equity ratio, has a weighted average cost of capital of 9%. The firm is growing at a constant rate and does not issue any preferred shares. The after-tax cost of debt is determined at 9%. The expected dividend to be declared by Badidap Co. is P2 and growth rate is 1%. How much is the current price of the ordinary share?

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A: Cost of capital:The cost of capital refers to the expenses a company incurs in order to finance…

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A: Cost of capital can be referred to as the cost at which the company raises its capital. It can also…

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A: The Weighted Average Cost of Capital (WACC) is a vital financial metric that shows the average cost…

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A: The Weighted Average Cost of Capital WACC is calculated with the help of following formula  WACC =…

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A: A business with no debt in its capital structure is called an unleveled firm or an all-equity firm.…

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A: WACC is the weighted average cost of capital which include all sources of capital and is calculated…

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A: Given information:Unlevered cost of capital (ru​) = 10%Tax rate (Tc​) = 35%Cost of debt (rd​) =…

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A: WACC = (Weight of common stock * Cost of common equity) + [Weight of debt * YTM(1 - Tax rate)]…

Q: b. Rivoli is considering selling bonds and simultaneously repurchasing some of its stock. If it…

A: Calculation of New WACC, Levered value of the firm and Amount of debt:In new structure:Weight of…

Q: 45

A: Formula for WACC is: WACC = cost of equity*% of equity + Cost of debt*% of debt(1-tax rate) + Cost…

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A: A company's average after-tax cost of capital from all sources, including common stock, preferred…

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A: Answer 1. The market value of the firm's stock = Price * Shares Outstanding The market value of the…

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A: The rate of return that is expected by investors on their equity investment is term as the cost of…

Q: Pearson Motors has a target capital structure of 40% debt and 60% common equity, with no preferred…

A: WACC = Weight of equity * Cost of equity + Weight of debt * after tax cost of debt After tax cost of…

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A: The growth rate is a measure of how a specific quantity, such as a company's sales, revenue, or…

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A: The cost of equity can be calculated with the help of dividend discount model.

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A: The objective of the question is to calculate the cost of common equity for Pearson Motors. The…

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Q: Pearson Motors has a target capital structure of 30% debt and 70% common equity, with no preferred…

A: Calculation of cost of capital of common equity

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A: Solution:- Weighted Average Cost of Capital (WACC) means the average minimum return required by the…

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A: a) Determine the cost of equity after the transaction:We'll use the Capital Asset Pricing Model…

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A: WACC is also known as Weighted Average Cost of Capital. It includes the cost of debt & cost of…