perties Berhad uses the following four sources of capital in their company's operations; No Sources of Capital Amount Cost model 1 Ordinary stock RM300 Million 10.0% 2 Priority share RM200 Million 14.0% 3 Bond RM400 Million 7.0% (before tax) 4 Retained earnings RM100 Million 8.0%

perties Berhad uses the following four sources of capital in their company's operations; No Sources of Capital Amount Cost model 1 Ordinary stock RM300 Million 10.0% 2 Priority share RM200 Million 14.0% 3 Bond RM400 Million 7.0% (before tax) 4 Retained earnings RM100 Million 8.0%

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter17: Multinational Capital Structure And Cost Of Capital

Section: Chapter Questions

Problem 12QA

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You are given the financial information for the Unic Company: Earnings Before Interest and Tax (EBIT) = $126.58 Corporate tax rate (TC) = 0.21 Debt (D) = $500 Unlevered cost of capital (RU) = 0.20 The cost of debt capital is 10 percent. Question: Determine the value of Unic Company equity? Determine the cost of equity capital for Unic Company? Determine the WACC for Unic Company?
You have been presented with the following information from Bogus Ltd. Source of Capital Book Value Market Value Before-tax cost Long-term debt R11 823 158 R7 389 474 8% Preference shares R118 232 R177 347 13% Ordinary shares R3 103 579 R8 867 368 17% Total R15 044 969 R16 434 189 Assume Bogus Ltd has an average tax rate of 27% Required: a) Calculate the WACC based on the book value weights. Round off answers to two decimal places b) Compare the book value and market value method of calculating the WACC.
As an Analyst you were tasked to compute for the Weighted Average Cost of Capital of variouscompanies given the following information. Income tax rate is 25% a. What is the cost of equity of each companies?b. What is the after tax cost of debt of each companies?c. What is the WACC of each companies? W Corp A Corp Co. Corp Ca Corp Risk Free rate 4.00% 3.00% 2.00% 3.50% Beta 1.25 % 1.50% 1.30% 1.40% Market Return 12.00% 11.00 % 10:00% 8:00% Debt to Equity Ratio 2.5 3 4 3.5 Credit Spread om BPS 200 300 250 150
The Chief Financial Officer (CFO) of the Q14.05T Company is interested to identify the cost of capital and value of the company. Currently, the Q14.05T is an all-equity company. Earnings before interest and taxes (EBIT) for the company is expected to be $86,198 forever, and the cost of capital is currently 14.05 percent. The corporate tax rate applicable to this company is 32.0 percent. Requirement-A. Calculate the market value of Q14.05T. Requirement-B. Suppose Q14.05T floats a $34,579 debt issue and uses the proceeds to reduce share capital. The interest rate is 10.74 percent. Calculate the new value of the business. Requirement-C. Calculate the new value of equity. Requirement-D. Calculate the cost of equity of Q14.05T after the debt issue. Requirement-E. Calculate the weighted average cost of capital. Requirement-F. What are the implications for capital structure?
An accountant for Stability Inc. must calculate the weighted average cost of capital of the corporation using the following information. Interest Rate Accounts payable $35,000,000 0 Long-term debt 10,000,000 8% Common stock 10,000,000 15% Retained earnings 5,000,000 18% What is the weighted average cost of capital of Stability? Select one: a. 8.00% b. 10.25% c. 12.80% d. 6.88%
A company currently has a 100% equity structure. Let the current value of the company be approximated by $CV. Assuming corporate taxes exist but personal taxes do not, select the following option that describes the value of the company if the company adds debt to its capital structure. $CV + future value of tax savings on interest $CV + future value of interest savings on tax $CV + present value of tax savings on interest $CV + present value of interest savings on tax
REQUIREMENT: 1. How much is the weighted average cost of capital of ABC?
QUESTION 1 (40 marks) Nona Corporation is interested in measuring the cost of each specific type of capital as well as the weighted average cost of capital.. Historically, the firm has raised capital in the following manner: Table of Source of Capital and Its Weight Source of Capital Weight Long Term Debt 15% Preferred Stock 25% Common Stock Equity 40% The tax rate of the firm is currently 40%. The needed financial information and data are as follows: Debt Nona can raise debt by selling RM1,000 par-value, 8.5% coupon interest rate, 10-year bonds on which annual interest payments will be made. To sell the issue, an average discount of RM15 per bond needs to be given. There is an associated flotation cost of 2% of par value. Prefered stock Preferred stock can be sold under the following terms: The security has a par value of RM100 per share, the annual dividend rate is 7% of the par value, and the flotation cost is expected to be RM5 per share. The preferred stock is expected to sell for…
6. What is the Cost of Equity for CS3? 7. The weighted average cost of capital for CS1 is 8. The weighted average cost of capital for CS3 is 9. What is the weight of equity in the optimal capital structure 10. What is the weighted average cost of capital on the optimal capital structure?
Consider a company with the following capital structure and subject to a company tax rate of 30%: Market Value Market Yield (before-tax) Ordinary shares $2,000,000 16% Preference shares $1,000,000 15% Bonds $2,000,000 12% Calculate the after-tax weighted average cost of capital for the company Explain why the market yields for ordinary shares and preference shares do not need to be adjusted for taxation
S&G Given the following information on S & G Inc.'s capital structure, compute the company's weighted average cost of capital. Type of Capital Percent of Capital Structure Before-Tax Component Cost Bonds 40% 7.5% Preferred Stock 5% 11% Common Stock (Internal Only) 55% 15% The tax rate is 28%. 15) The after tax rate for the bond is %. (2 decimals) %. (2 16) Before tax wacc is decimals) 17) After tax wacc is _-- _%. (2 decimals)
What is the company’s after-tax weighted average cost of capital if National Co. pays 25% taxes? (Format: X.XX%)

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bartleby, a Learneo, Inc. business

No	Sources of Capital	Amount	Cost model
1	Ordinary stock	RM300 Million	10.0%
2	Priority share	RM200 Million	14.0%
3	Bond	RM400 Million	7.0% (before tax)
4	Retained earnings	RM100 Million	8.0%