Hexaware Systems Limited uses the market value weights of Debt and Equity for its WACC computation. The firm has issued 1 million bonds and the bonds are currently trading at $255 each. The debt issued by the firm carries AAA rating. The credit spread is 150 basis points of 10-year treasury yield. The 10-year treasury is currently yielding 5.2%. Th firm has 20 million shares outstanding with a current market price of $410 each. The return from DJIA for the period is 12% and the beta of Hexaware is 1.3.
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- ROFL Limited has asked you to calculate the debt component to help in its calculation of its weighted average cost of capital (WACC). ROFL has 7,000 Corporate Bonds outstanding with a face value of $29,000 each. The coupon rate is 3% p.a. compounding semi-annually. The bonds mature in 20 years and currently ROFL bonds are trading in the market at a yield of 6%p.a. If a coupon payment was paid today what is the total market value of ROFL’s issued bonds? Provide your answer to the nearest dollar.Plastico, a manufacturer of consumer plastic products, is evaluating its capitalstructure. The balance sheet of the company is as follows (in millions):Assets LiabilitiesFixed assets $4,000 Debt $2,500Current assets $1,000 Equity $2,500In addition, you are provided the following information:• The debt is in the form of long-term bonds, with a coupon rate of 10%. The bondsare currently rated AA and are selling at a yield of 12% (the market value of the bonds is80% of the face value).• The firm currently has 50 million shares outstanding, and the current market priceis $80 per share. The firm pays a dividend of $4 per share and has a price/earnings ratioof 10.• The stock currently has a beta of 1.2. The riskfree rate is 8%.• The tax rate for this firm is 40%.a. What is the debt/equity ratio for this firm in book value terms? In market valueterms?b. What is the debt/(debt + equity) ratio for this firm in book value terms? In marketvalue terms?c. What is the firm’s after-tax cost of debt?Plastico, a manufacturer of consumer plastic products, is evaluating its capitalstructure. The balance sheet of the company is as follows (in millions):Assets LiabilitiesFixed assets $4,000 Debt $2,500Current assets $1,000 Equity $2,500In addition, you are provided the following information:• The debt is in the form of long-term bonds, with a coupon rate of 10%. The bondsare currently rated AA and are selling at a yield of 12% (the market value of the bonds is80% of the face value).• The firm currently has 50 million shares outstanding, and the current market priceis $80 per share. The firm pays a dividend of $4 per share and has a price/earnings ratioof 10.• The stock currently has a beta of 1.2. The riskfree rate is 8%.• The tax rate for this firm is 40% Plastico is considering a major change in its capital structure. It has three options:• Option 1: Issue $1 billion in new stock and repurchase half of its…
- Plastico, a manufacturer of consumer plastic products, is evaluating its capitalstructure. The balance sheet of the company is as follows (in millions):Assets LiabilitiesFixed assets $4,000 Debt $2,500Current assets $1,000 Equity $2,500In addition, you are provided the following information:• The debt is in the form of long-term bonds, with a coupon rate of 10%. The bondsare currently rated AA and are selling at a yield of 12% (the market value of the bonds is80% of the face value).• The firm currently has 50 million shares outstanding, and the current market priceis $80 per share. The firm pays a dividend of $4 per share and has a price/earnings ratioof 10.• The stock currently has a beta of 1.2. The riskfree rate is 8%.• The tax rate for this firm is 40%.a. What is the debt/equity ratio for this firm in book value terms? In market valueterms?b. What is the debt/(debt + equity) ratio for this firm in book value terms? In marketvalue terms?c. What is the firm’s after-tax cost of…You are analyzing the cost of debt for a firm. You know that the firm’s 14-year maturity, 8.6 percent coupon bonds are selling at a price of $984.08. The bonds pay interest semiannually. If these bonds are the only debt outstanding for the firm, answer the following questions. What is the current YTM of the bonds? (Round final answer to 2 decimal places, e.g. 15.25%.) Current YTM for the bonds enter the current YTM of the bonds in percentages rounded to 2 decimal places %Exxa Capital Berhad's capital are as follows: Bonds: The company's callable bond was sold for RM924 and will be redeemed at RM1300 per unit. The bond has a maturity of 25 years with semi- annual coupon of 5.8% per annum. Preferred stocks: The dividend rate is 12% on a par value of RM100, and the interest rate is 6.75% . Common stocks: The company paid dividend for financial year ending 2022 for RM0.038 per unit. The current rate of return is 6.18% and the constant growth dividend is 4%. New bonds: As part of the company's expansion new bonds issuance is planned at the end of 2024. The bond maturity is 25 years, quarterly coupon at a rate of 1 1. Calculate the bond's annual yield to maturity. 2. Calculate the price of the preferred stock. 3. Calculate the current price of the common stock. 4. Calculate the net proceed of the bond issuance. 5. Calculate the net proceed of the bond issuance.
- Exxa Capital Berhad's capital are as follows: Bonds: The company's callable bond was sold for RM924 and will be redeemed at RM1300 per unit. The bond has a maturity of 25 years with semi - annual coupon of 5.8% per annum. Preferred stocks: The dividend rate is 12% on a par value of RM100, and the interest rate is 6.75%. Common stocks: The company paid dividend for financial year ending 2022 for RM0.038 per unit. The current rate of return is 6.18% and the constant growth dividend is 4%. New bonds: As part of the company's expansion new bonds issuance is planned at the end of 2024. The bond maturity is 25 years, quarterly coupon at a rate of 1 1. Calculate the bond's annual yield to maturity. 2. Calculate the price of the preferred stock. 3.Calculate the current price of the common stock. 4. Calculate the net proceed of the bond issuance. 5.Calculate the net proceed of the bond issuance.Big Door Company has 8.7 million shares outstanding, which are currently trading for about $13 per share and have a levered equity beta of 1.2. Big Door has 19,900 outstanding bonds, with a 4% coupon rate, payable semi-annually and due in 10 years. The bonds are rated BBB. Currently the credit spread for BBB is 178 basis points over equivalent-maturity Government of Canada debt. The current yield on 10-year Canada bonds is 5%, compounded semi-annually. The risk-free interest rate is 2%, and the market risk premium is 6.6%. The company has a 35% tax rate. (Do not round intermediate calculations.) a. Calculate Big Door's WACC. (Round your answer to 2 decimal places.) WACC b. Calculate Big Door's unlevered beta, using the following formula: (Round your answer to 2 decimal places.) Pleveret Pdebtx (1–Tc)×D/E BU 1+(1–Tc)×D/E es Unlevered beta c. If Big Door was 50% debt-financed, what would be its WACC? Assume that the beta of its debt is unchanged by the capital structure change. (Round…Two years ago, Company XYZ issued $100 million worth of ten-year bonds with a face value of $1,000 and a coupon rate of 5%. Coupon payments are made semi-annually. Two years ago, the market yield-to-maturity was 3% p.a. Due to the increased insecurity facing the industry, the market yield to maturity is now 7% p.a. a) Determine the market price of the bonds at issue based on an appropriate model. b) Based on the yield-to-maturity today, assess whether the price has changed and proceed to determine its market price today. c) Compare the results in (a) and (b) above and interpret the sensitivity of bond prices to maturity and yield to maturity.
- Two years ago, Malayawata Steel issued RM 100 million worth of ten-year bonds with a face value of RM1,000.00 and a coupon rate of 5%. Coupon payments are made semi-annually.Two years ago, the market yield-to-maturity was 3% p.a.Due to the increased insecurity facing the industry, the market yield to maturity is now 7% p.a.a) Determine the market price of the bonds at issue based on an appropriate model.b) Based on the yield-to-maturity today, assess whether the price has changed and proceed to determine its market price today.c) Compare the results in (a) and (b) above and interpret the sensitivity of bond prices to maturity and yield to maturity.You are analyzing the cost of debt for a firm. You know that the firm’s 14-year maturity, 8.6 percent coupon bonds are selling at a price of $849.00. The bonds pay interest semiannually. If these bonds are the only debt outstanding for the firm, answer the following questions. What is the current YTM of the bonds? (round intermediate calculations to 4 decimal places, and final answer to 0 decimal places) What is the after-tax cost of debt for this firm if it has a 30 percent marginal and average tax rate? (Round final answer to 2 decimal places, e.g. 15.25%.)A noncallable bonds were issued several years ago, and have a 20 year maturity. These bonds have a 9.25% annual coupon paid semiannually, sells at $1,075 and has a par value of $1,000. If the firms tax rate is 40%, what is the company cost of debt for WACC calculation? (5.33%, 5.08%, 4.58%, 4.35%, and 4.87%)