Reference is made to the 2022 Balance Sheet of Tran-Ropes limited. Tran-Ropes Limited Balance Sheet 2022 Cash ACC. Marketable securities 1,000,000.00 Accounts Payable 8,000,000.00 Notes Payable 8.500,000.00 20.000.000.00 Long-term Debt iii. Preferred shares have a book value of $100 per share. These shares are currently selling at $120 per share and pays dividends of 6% per annum on book value. The dividend growth rate is expected to be 3%, and dividend for 2823 is projected to be $5.00 per share. v. The Company's Tax rate is 30%. iv. Required: Determine the following for Tran-Ropes Limited: A. Total Market value of the firm's capital structure B. After-tax Cost of Debt C. Cost of Common Stock D. Cost of Preferred Stock E. HACC
Reference is made to the 2022 Balance Sheet of Tran-Ropes limited. Tran-Ropes Limited Balance Sheet 2022 Cash ACC. Marketable securities 1,000,000.00 Accounts Payable 8,000,000.00 Notes Payable 8.500,000.00 20.000.000.00 Long-term Debt iii. Preferred shares have a book value of $100 per share. These shares are currently selling at $120 per share and pays dividends of 6% per annum on book value. The dividend growth rate is expected to be 3%, and dividend for 2823 is projected to be $5.00 per share. v. The Company's Tax rate is 30%. iv. Required: Determine the following for Tran-Ropes Limited: A. Total Market value of the firm's capital structure B. After-tax Cost of Debt C. Cost of Common Stock D. Cost of Preferred Stock E. HACC
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
Problem 1PS
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Transcribed Image Text:Reference is made to the 2022 Balance Sheet of Tran-Ropes limited.
Tram-Ropes Limited
Balance Sheet 2022
Cash
Acc.
Receivable
Marketable
securities
Inventories
Fixed Assets
Total Assets
1,000,000.00
ii.
12,000,000.00
3,000,000.00
7,500,000.00
26,500,000.00
50,000,000,00
Accounts Payable
Notes Payable
Long-term Debt
Common stock
Preferred Stock
Total
Liabilities and
Equity
8,000,000.00
8,500,000.00
20,000,000.00
7,500,000.00
6,000,000.00
50,000,000.00
Additional Information:
1. The Long-Term debt consists of 8% annual coupon bonds, with
15 years to maturity and are currently selling for 95% of
par.
The company's common shares which have a book value of $20
per share are currently selling at $25 per share.
iii.
iv.
V.
Preferred shares have a book value of $100 per share. These
shares are currently selling at $120 per share and pays
dividends of 6% per annum on book value.
The dividend growth rate is expected to be 3%, and dividend
for 2823 is projected to be $5.00 per share.
The Company's Tax rate is 30%.
Required:
Determine the following for Tram-Ropes Limited:
A. Total Market value of the firm's capital structure
B. After-tax Cost of Debt
C. Cost of Common Stock
D. Cost of Preferred Stock
E. WACC
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