Based on your financial statement analysis on Gold Limited (“Gold”), you noted as it has a target debt-to-equity structure of 0.75. Gold’s shares currently trade at $6.60. Dividends paid last year were $0.50 and this is expected to grow at 3% per year to perpetuity. Its pre-tax cost of debt is 8%. Market research also revealed as follows: • Inflation rate = 2% • Yield on government securities = 4% • Market risk premium = 6% • Tax rate = 20% Solve for Gold’s weighted average cost of capital.

The following data refers to Company Z: -      Beta = 1.7 -      Required return on debt (yield to maturity on a long term bond) = 3.1% -      Tax rate = 21% -      30-year government bond = 2.3% -      Market risk premium can be assumed to be 5%   Estimate the cost of capital (WACC) for Company Z.

Value+ is currently estimating the value of its debt and equity instruments and had obtained the following information: Long-term government securities currently trade at a yield of 4.5% Cost of debt was estimated at 6.5% factoring the credit riskiness of Value+ 60% of its profits are historically recapitalized into the business but this is expected to be at 80% beginning next year as Value+ expands into the Chinese market Current year profit is at Php500,000 and total shareholder's equity is at Php5,000,000 with 100,000 outstanding common shares Shares currently trade at Php54.00 1. What is the required rate of return when the intrinsic value of the share is Php27? 2. What is the expected return of Value+? 3. What is the growth rate of Value+?

Whirlpool manufactures and sells home appliances under various brand names. IBM develops and manufactures computer hardware and offers related technology services. Target operates a chain of general merchandise discount retail stores. The data in the following table apply to these companies (dollar amounts in millions). For each firm, assume that the market value of the debt equals its book value. REQUIRED a. Assume that the intermediate-term yields on U.S. government Treasury securities are 3.5%. Assume that the market risk premium is 5.0%. Compute the cost of equity capital for each of the three companies. b. Compute the weighted-average cost of capital for each of the three companies. c. Compute the unlevered market (asset) beta for each of the three companies. d. Assume that each company is a candidate for a potential leveraged buyout. The buyers intend to implement a capital structure that has 75% debt (with a pretax borrowing cost of 8.0%) and 25% common equity. Project the weighted-average cost of capital for each company based on the new capital structure. To what extent do these revised weighted-average costs of capital differ from those computed in Requirement b?

Suppose the Schoof Company has this book value balance sheet: The notes payable are to banks, and the interest rate on this debt is 10%, the same as the rate on new bank loans. These bank loans are not used for seasonal financing but instead are part of the companys permanent capital structure. The long-term debt consists of 30,000 bonds, each with a par value of 1,000, an annual coupon interest rate of 6%, and a 20-year maturity. The going rate of interest on new long-term debt, rd, is 10%, and this is the present yield to maturity on the bonds. The common stock sells at a price of 60 per share. Calculate the firms market value capital structure.

Consider the following information for Abracadabra of America . Debt $84,000,000 book value outstanding The debt is trading at 86% of book value. The yield to maturity is 7% . Equity: 3.400,000 shares selling at $51 per share. Assume the expected rate of return on Abracadabra's stock is 16% . Taxes: Abracadabra's marginal tax rate is T0.21. You want to include financing in your valuation decision. Calculate the rate that you would use (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) answer

Alexa Co. is the value of its equity given the following information:Government risk-free rates today stands at 4.5%Alexa is expected to declare dividends amounting to Php10.00 next yearDividends are expected to grow at 20% per year until year 5 and stabilizes at 4% beginning year 6 onwardsBeta is currently estimated at 2.0Equity risk premium is estimated at 4% 1. How much is the terminal value of the dividends at year 5? 2. How much is the price today of Alexa's share? 3. How much is the market risk premium for Alexa?

Alexa Co. is the value of its equity given the following information:Government risk-free rates today stands at 4.5%Alexa is expected to declare dividends amounting to Php10.00 next yearDividends are expected to grow at 20% per year until year 5 and stabilizes at4% beginning year 6 onwardsBeta is currently estimated at 2.0Equity risk premium is estimated at 4% 1. How much is the price today of Alexa's share?2. How much is the terminal value of the dividends at year 5?

Give typing answer with explanation and conclusion Jenkins, Inc., has equity with a market value of $23.5 million and debt with a market value of $11.75 million. The cost of debt is 8 percent per year. Treasury bills that mature in one year yield 4 percent per year, and the expected return on the market portfolio over the next year is 10 percent. The beta of the company’s equity is 1.2. The firm pays no taxes. a. What is the company’s debt-equity ratio? (Do not round) a. Debt-equity ratio b. weighted average cost of capital c. cost of capital

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