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)

Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter7: Financial Activities
Section: Chapter Questions
Problem 11QE
Question
help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working
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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