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Cash 14 Accounts payable Receivables 70 Other current liabilities Inventories 280 Total CL Total CA 364 Long-term debt (20 bonds) 42 28 70 145 Net fixed assets 126 Common equity (100 shares outstanding) 275 Total assets 490 Total liab. and equity 490 1. The stock is currently selling for SAR 22 per share and there are 100 shares outstanding 2. Its bonds are 8-year bonds with 13% coupon rate paid annually and the face value of SAR 500. They are currenty selling at SAR 750 3. The required rate of return on its common stock is 7%. 4. Assume the firm's tax rate is 40%. What is the WACC for AlHokair Company using Book value weights? a. The before tax cost of debt (rd) is ☐ % (use 2 decimals) b. The weights of debt using book value ☐ % (use 2 decimals) c. The cost of equity is % (use 2 decimals) d. The WACC using the Book value weights is ☐ % (use 2 decimals)

Cash 14 Accounts payable Receivables 70 Other current liabilities Inventories 280 Total CL Total CA 364 Long-term debt (20 bonds) 42 28 70 145 Net fixed assets 126 Common equity (100 shares outstanding) 275 Total assets 490 Total liab. and equity 490 1. The stock is currently selling for SAR 22 per share and there are 100 shares outstanding 2. Its bonds are 8-year bonds with 13% coupon rate paid annually and the face value of SAR 500. They are currenty selling at SAR 750 3. The required rate of return on its common stock is 7%. 4. Assume the firm's tax rate is 40%. What is the WACC for AlHokair Company using Book value weights? a. The before tax cost of debt (rd) is ☐ % (use 2 decimals) b. The weights of debt using book value ☐ % (use 2 decimals) c. The cost of equity is % (use 2 decimals) d. The WACC using the Book value weights is ☐ % (use 2 decimals)

Essentials Of Investments
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
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Cash 14 Accounts payable Receivables 70 Other current liabilities Inventories 280 Total CL Total CA 364 Long-term debt (20 bonds) 42 28 70 145 Net fixed assets 126 Common equity (100 shares outstanding) 275 Total assets 490 Total liab. and equity 490 1. The stock is currently selling for SAR 22 per share and there are 100 shares outstanding 2. Its bonds are 8-year bonds with 13% coupon rate paid annually and the face value of SAR 500. They are currenty selling at SAR 750 3. The required rate of return on its common stock is 7%. 4. Assume the firm's tax rate is 40%. What is the WACC for AlHokair Company using Book value weights? a. The before tax cost of debt (rd) is ☐ % (use 2 decimals) b. The weights of debt using book value ☐ % (use 2 decimals) c. The cost of equity is % (use 2 decimals) d. The WACC using the Book value weights is ☐ % (use 2 decimals)
Transcribed Image Text:Cash 14 Accounts payable Receivables 70 Other current liabilities Inventories 280 Total CL Total CA 364 Long-term debt (20 bonds) 42 28 70 145 Net fixed assets 126 Common equity (100 shares outstanding) 275 Total assets 490 Total liab. and equity 490 1. The stock is currently selling for SAR 22 per share and there are 100 shares outstanding 2. Its bonds are 8-year bonds with 13% coupon rate paid annually and the face value of SAR 500. They are currenty selling at SAR 750 3. The required rate of return on its common stock is 7%. 4. Assume the firm's tax rate is 40%. What is the WACC for AlHokair Company using Book value weights? a. The before tax cost of debt (rd) is ☐ % (use 2 decimals) b. The weights of debt using book value ☐ % (use 2 decimals) c. The cost of equity is % (use 2 decimals) d. The WACC using the Book value weights is ☐ % (use 2 decimals)
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