Sunrise Manufacturing, Inc. Sunrise Manufacturing, Ic., a U.S. multinational company, has the following debt components in its consolidated capital section, E. Sunrise's shareholders' equity is $40,000,000 and its finance staff estimates their cost of equity to be 20.0%. Current exchange rates are also listed in the table. Income taxes are 40% around the world after allowing for credits. Calculate Sunrise's weighted average cost of capital. Are any assumptions implicit in your calculation? What is Sunrise's weighted average cost of capital? % (Round to two decimal places.) Data table Value Assumption Tax rate 25-year US$ bonds 5-year US$ bonds 40% $10,000,000 $6,000,000 €9,000,000 10-year eurobonds (euros)

Sunrise Manufacturing, Inc. Sunrise Manufacturing, Ic., a U.S. multinational company, has the following debt components in its consolidated capital section, E. Sunrise's shareholders' equity is $40,000,000 and its finance staff estimates their cost of equity to be 20.0%. Current exchange rates are also listed in the table. Income taxes are 40% around the world after allowing for credits. Calculate Sunrise's weighted average cost of capital. Are any assumptions implicit in your calculation? What is Sunrise's weighted average cost of capital? % (Round to two decimal places.) Data table Value Assumption Tax rate 25-year US$ bonds 5-year US$ bonds 40% $10,000,000 $6,000,000 €9,000,000 10-year eurobonds (euros)

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

Chapter11: Risk-adjusted Expected Rates Of Return And The Dividends Valuation Approach

Section: Chapter Questions

Problem 11PC: Whirlpool manufactures and sells home appliances under various brand names. IBM develops and...

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Sainsbury is financed by both debt and equity. Using the following information and calculate the weighted average cost of capital (WACC) of Sainsbury. (HINT)the average of recent yearly returns of FTSE100 as proxy of UK market is 7.5%; UK corporate tax rate is 19%). Debt 748,000 Equity 6,604,000 Risk free rate 1.971% Beta 0.27 Current Debt 258,000 Total liabilities and stockholders' equity 25,162,000
(a) An MNC has total assets of $150 million and debt of $50 million. The firm's before-tax cost of debt is 10 percent, and its cost of financing with equity is 12 percent. The MNC has a corporate tax rate of 32 percent. What is this firm's weighted average cost of capital? (b) Slater Co. is a US based MNC that finances all operations with debt and equity. It borrows U.S. funds at an interest rate of 10 percent per year. The long-term risk-free rate in the United States is 5 percent. The stock market return in the United States is expected to 15 percent annually. Slater's beta is 1.5. Its target capital structure is 40 percent debt and 60 percent equity. Slater Co.is subject to a 30 percent corporate tax rate. Estimate the cost of capital to Slater Co.
a) An Australian company has total assets of $150 million and debt of $30 million. The firm's before-tax cost of debt is 5% and its cost of equity is 12%. If the corporate tax rate is 30%, calculate the firm's cost of capital and the appropriateness of its use as a discount rate in capital budgeting. (b) Assume AUD = 0.58 GBP and inflation is 3.5% pa in Australia and 7% pa in Great Britain. Estimate the AUD/GBP spot rate in one year's time and comment on the accuracy of this estimate.
Consider the following data for the firms Acme and Apex: Equity ($ million) Debt ($ million) ROC Cost of Capital Acme 290 145 17% 9% Apex 1,450 483 15% 10% a. Calculate the economic value added for Acme and Apex (round to 2 decimal places). Economic value added for Acme $? million Economic value added for Apex $? million b. Calculate the economic value added per dollar of invested capital for Acme and Apex (round to 2 decimal places)? Economic value added for Acme per dollar Economic value added for Apex per dollar
Citigroup SmithBarney (Reais). In a report dated June 17, 2003, Citigroup SmithBarney calculated a WACC for Petrobrás denominated in Brazilian reais (R$). Evaluate the methodology and assumptions used in this cost of capital calculation. Risk-free rate (Brazilian C-Bond) Petrobrás levered beta Market risk premium Cost of equity Cost of debt Brazilian corporate tax rate Long-term debt ratio (% of capital) WACC (RS) 9.90% 1.40 5.50% 17.60% 10.00% 34.00% 50.60% 12.00%
OSA Company has the following values of interest-bearing debt and common equity capital: Financing Source Dollar Amount Interest Rate Cost of CapitalShort-term loan $200,000 12%Long-term loan $200,000 14%Equity capital $600,000 22% OSI is in the 30 percent average tax bracket. A. Calculate the after-tax weighted average cost of capital for OSI. B. Given that OSI's EBIT is $300,000, compute its EVA. C. Did the venture build or destroy value? Explain. Make sure to show all the formulas and calculations in addition to any assumption needed.
Shi Import-Export's balance sheet shows $300 million in debt, $50 million in preferred stock, and $250 million in total common equity. Shi's tax rate is 25%, rd = 6%, rps = 7.7%, and rs = 14%. If Shi has a target capital structure of 30% debt, 5% preferred stock, and 65% common stock, what is its WACC? Round your answer to two decimal places.
Company X has debt and equity as sources of funds. Company X has market value of debt as $150,000 and book value of debt as $80,000. The company has book value of equity as $100,000 and market value of equity as $125,000. The cost of debt is 8.25% and cost of equity is 9.57%. the tax rate is 38%. What is the Weighted Average Cost of Capital (WACC)? a. 7.59% b. 7.78% c. 7.14% d. 7.68%
A financial analyst is in the process of estimating the cost of capital of Gewicht GmbH. The following informnation is obtained from the company web pages. Market value of debt: $50 million • Market value of equity: $600 million Table 1. Primary competitors and capital structures (in millions) Market value of Market value of Competitor debt equity A $25 $50 B $101 $190 C $40 $60 QUESTIONS: What are Gewicht GmbH target capital structure (DV and E/V) if the analyst uses current capital structure? und numberto four decimalpla to report the results Options: 0.4213 0.4921 0,4545 0,5454 D/V v EN
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Here is Icknield’s market-value balance sheet (figures in $ millions): Net working capital $550 Debt $800 long term assets $2,150 Equity $1,900 value of firm $2,700 $2,700 The debt is yielding 7%, and the cost of equity is 14%. The tax rate is 21%. Investors expect this level of debt to be permanent. a. What is Icknield’s WACC? b. How would the market-value balance sheet change if Icknield retired all its debt?
Given the information below. Find the Weighted Average Cost of Capital Market Value of Equity = $22,000,000; Debt = $15,000,000; Cash or Cash Equivalents = $15,000,000 iD = 0.10 or 10% iMKT = 0.17 or 17% tCorp = 0.30 or 30% bK = 1.5 IRF = 0.02 = 2%