Want to this question answer general Accounting question Beta Corporation has the following capital structure:⚫ 4.2 million shares of common stock trading at $32 per share••1.5 million shares of preferred stock trading at $18 per share35,000 bonds trading at 96.5% of $1,000 par valueCalculate the weight of equity for Beta Corporation's WACCcomputation.

Step 1: Definition:Market Value of Common Stock: Total value of all common shares, calculated by…

Answered: Beta Corporation has the following…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A firm has 750 bonds outstanding that are selling for $989 each, 2,500 shares of preferred stock with a market price of $47 per share, and 30,000 shares of common stock valued at $56 per share. What weight should be assigned to the common stock when computing the firm's weighted average cost of capital? a. 54.00% b. 55.45% c. 66.16% d. 62.08% e. 47.11%
Railsplitters, Inc. has the following information for its capital structure: Instrument: Amount Issued Current Price YTM Bond A $500 Million 100.82 4.36% Bond B $350 Million 101.36 4.49% Common Stock 42.5 Million Shares $28.21 per share E(R ) Market = 8.65% β = 1.27 Expected Dividend = $1.95 Rf = 2.10% Growth Rate = 2.75% Given this information, if the tax rate of the firm is 30%, what is the after-tax cost of debt?
Report inc as a shipping company with securities listed on the American stock exchange. The company has the following capital structure : Equity Common shares ($1 per share nominal value) Reserves $m $m 40 85. 125 Debt 5.5% unsecured bond ($100 per bond nominal value 55 20 year secured bank loan. 25 5%preference shares ($1 per share nominal value). 30 Total equity and debt 110 235 The common share have a beta of…
The Tyler Oil Company's capital structure is as follows: Debt Preferred stock Common equity 15% 20 65 The aftertax cost of debt is 5 percent; the cost of preferred stock is 8 percent; and the cost of common equity (in the form of retained earnings) is 11 percent. Calculate Tyler Oil Company's weighted average cost of capital in a manner similar to Table 11-1. (Round the final answers to 2 decimal places.) Debt (Kd) Preferred stock (Kp) Common equity (Ke) (retained earnings) Weighted average cost of capital (Ka) Weighted Cost % 9.50 %
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Question 1 The following information relates to a company listed on Luse- Mungwi PLC ZMK Issued share capital (1000 shares) Share premium. Reserves. Share holders funds. 6% Irredeemable Debentures. 9% Redeemable Debentures. Bank loan. Total Long Term Liabilities. Million 4 000 2 600 290 6,890 2,800 2,900 1 000 6 700 The current cum interest market value per k100 units is k103 and k105 fir the 6% and 9% Debentures respectively. The 9% Debenture is redeemable at par in 10 years time. The bank loan bears interest rate of 2% above the base rate (current base rate is 15%). The current ex-div market price of shares is k1, 100 and a dividend of K100 per share which is expected to grow at a rate of 5% per year has just been paid. The effective corporation tax rate for Mungwi is 30%. Required: A) Calculate the effective after tax weighted Average Cost of Capital (WACC) fir Mungwi PLC
Sub: general accounting
Following is the Balance Sheet of Redeemable Limited: 24 I. Equity and Liabilities (1) Shareholders' Funds (a) Paid-up Share Capital : 10% 1,000 Redeemable Preference Shares of $ 100 each fully called up Less : Calls in Arrears on 50 Shares @ $ 20 each 1,00,000 1,000 99,000 5,00,000 50,000 Equity Shares of $10 each (b) Reserves and Surplus : Development Rebate Reserve General Reserve 50,000 1,00,000 1,50,000 1,51,000 (2) Other Liabilities Total Equity and Liabilities 9,00,000 II. Assets Other Assets 8,10,000 90,000 Bank Total Assets 9,00,000 The Redeemaule Preference Shares were redeemed on the following basis : (1) Further 4,500 equity shares were issued at a premium of 10 per cent; (2) of the 50 Preference Shares, holders for 40 shares paid the call before the date of redemption. The balance 10 shares were forfeited for non-payment of calls before redemption. The forfeited shares were reissued as fully paid on receipt of $500 before redemption; (3) Preference shares were redeemed at…
Dillinger Plc has the following capital structure: Equity: Ordinary shares - £1,000,000 issued with a nominal value of £0.20 and a market value of £0.65 Preference Shares - £260, 000 issued with a nominal value of £0.45 and a market value of £0.40. The annual (recurring) dividend of 8.5% has just been paid. Debt: Bonds - £100, 000 of 6% irredeemable bonds with a market value of £104 per £100. The annual interest payment has just been made. • The company pays corporation taxation at the rate of 30%. • The risk-free rate of return is estimated to be 2% and the market rate of return is estimated to be 2.55 times the risk-free rate. • The beta is 0.8. Calculate the after-tax cost of capital for Dillinger Plc.
Dillinger Plc has the following capital structure: Equity: Ordinary shares - £1,000,000 issued with a nominal value of £0.20 and a market value of £0.65 Preference Shares - £260, 000 issued with a nominal value of £0.45 and a market value of £0.40. The annual (recurring) dividend of 8.5% has just been paid. Debt: Bonds - £100, 000 of 6% irredeemable bonds with a market value of £104 per £100. The annual interest payment has just been made. • The company pays corporation taxation at the rate of 30%. • The risk-free rate of return is estimated to be 2% and the market rate of return is estimated to be 2.55 times the risk-free rate. • The beta is 0.8. a) Calculate the after-tax cost of capital for Dillinger Plc. b) Identify and discuss the criticisms that can be made of the dividend model when it is used to estimate the cost of equity capital.
Dillinger Plc has the following capital structure: Equity: Ordinary shares - £1,000,000 issued with a nominal value of £0.20 and a market value of £0.65 Preference Shares - £260, 000 issued with a nominal value of £0.45 and a market value of £0.40. The annual (recurring) dividend of 8.5% has just been paid. Debt: Bonds - £100, 000 of 6% irredeemable bonds with a market value of £104 per £100. The annual interest payment has just been made. • The company pays corporation taxation at the rate of 30%. • The risk-free rate of return is estimated to be 2% and the market rate of return is estimated to be 2.55 times the risk-free rate. • The beta is 0.8. 1) Calculate the after-tax cost of capital for Dillinger Plc. 2) Identify and discuss the criticisms that can be made of the dividend model when it is used to estimate the cost of equity capital. 3) The directors of Dillinger Plc are about to conduct a review of the organisation’s capital structure and cost base. Draft a…
A corporation has the following account balances: Common Stock. $1 par value, $80000; Paid-in Capital in Excess of Par Value, $2710000. Based on this information, the O average price per share issued is $3.49. O number of shares issued is 80000 O number of shares outstanding is 2790000. O legal capital is $2790000.

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