Using the following information calculate the WACC of Aqua Ltd. The company has 0.3 million shares outstanding at a price of $92 per share. The beta of common stock of is 1.2. The risk-free rate is 5% and the market risk premium is 7%. • The company issued 11% preference shares with a total value of $ 25 million. The company issued 9% bonds of $33.6 million. The company pays corporate tax at 40 percent. A. 9.59% B. 9.89% C. 10.99% D. d.8.35%

Using the following information calculate the WACC of Aqua Ltd. The company has 0.3 million shares outstanding at a price of $92 per share. The beta of common stock of is 1.2. The risk-free rate is 5% and the market risk premium is 7%. • The company issued 11% preference shares with a total value of $ 25 million. The company issued 9% bonds of $33.6 million. The company pays corporate tax at 40 percent. A. 9.59% B. 9.89% C. 10.99% D. d.8.35%

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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Subject Test Note: - You are attempting question 2 out of Using the following information calculate the WACC of Aqua Ltd. The company has 0.3 million shares outstanding at a price of $92 per share. The beta of common stock of is 1.2. The risk-free rate is 5% and the market risk premium is 7%. The company issued 11% preference shares with a total value of $ 25 million. The company issued 9% bonds of $33.6 million. The company pays corporate tax at 40 percent. A. 9.59% B. 9.89% C. 10.99% D. d.8.35% Answer O C OD Submit
Using the following information calculate the WACC of Aqua Ltd. The company has 0.3 million shares outstanding at a price of $92 per share. The beta of common stock of is 1.2. The risk-free rate is 5% and the market risk premium is 7%. • The company issued 11% preference shares with a total value of $ 25 million. The company issued 9% bonds of $33.6 million. The company pays corporate tax at 40 percent. A. 9.59% B. 9.89% C. 10.99% D. d.8.35%
Using the following information calculate the WACC of Aqua Ltd. The company has 0.3 million shares outstanding at a price of $92 per share. The beta of common stock of is 1.2. The risk-free rate is 5% and the market risk premium is 7%. The company issued 11% preference shares with a total value of $ 25 million. The company issued 9% bonds of $33.6 million. The company pays corporate tax at 40 percent. A. 9.59% В. 9.89% C. 10.99% D. d.8.35%
The following financial data on the Bond Axiata Berhad are available:Earnings available for common stockholders RM1,600,000 Number of shares of common stock outstanding 800,000 Market Price per share RM40.00 The firm is currently considering whether it should use RM800,000 of its earnings to pay cash dividends of RM1 per share or to repurchase stock at RM42 per share.(a) Estimate the Earnings per share before repurchase (EPS)(b) Find the Price/earnings (P/E) ratio(c) Determine how many shares of stock can the firm repurchase at the RM42-per share price, using the funds that would have gone to pay the cash dividend. (d) Calculate the EPS after the repurchase. Explain your calculations.(e) If the stock still sells at 10 times earnings, what will the market price be after the Repurchase. (f) Examine the pre and post-repurchase earnings per share for the Bond Axiata Berhad(g) Compare and contrast the stockholders’ positions under the dividend and repurchase alternatives. Discuss the tax…
The Sweet Melon Corp. has total 100 shares trading on the market at $20 each.The book value of the total equity is $3500.The total market value of debt issurance is $4000.The expected return on total assets is 15% and the expected return on debt is 10%.What is the estimated return on equity? A.17.5% B.25% C.None of the choices D.18.3
Huntington Power Co. has issued following three securities as its long-term source of capital. Calculate the weights of each source of capital (kd, kp, ke). Debt: 2,500 bonds outstanding, current market price of the bond is $1,080. Preferred Stock: 3,000 shares outstanding, selling for $98. Common Stock: 60,000 shares outstanding, selling for $55 per share. a. 42.90%; 4.67%; 52.43% b. 45.63%; 1.72%; 59.67% c. 42.90%; 4.67%; 55.71% d. 59.67%; 5.08%; 35.24% e. 45.63%; 1.72%; 52.65% f. 42.90%; 2.23%; 52.14%
assume an analyst has valued a stock at $59.75 per share. What was the NPV of the firm if there are $ 3,500,000 shares outstanding and athe market value of the debt is $24,000,000
Faubney Ltd is a stock-exchange listed company. The capital structure of the companyas at 31 December 2015 is as follows: Equity Rs millionOrdinary Shares of Rs2 per share 400Reserves 30011% Preference Shares 200 Non-Current Liabilities Bond X (par value Rs1000) 400Bond Y (par value Rs1000) 250Faubney Ltd has an equity beta of 1.4. The risk-free rate of return is 4% per year and theaverage return on the market is 12% per year. Ordinary dividend paid for the year 2015was Rs120 million. The dividends of the company have grown in recent years by anaverage rate of 5% per year. The company issued preference shares at Rs1.25 per share and they are currently tradedat Rs1.40 per share. Bond X will be redeemed at par in 9 years' time and pays annual interest of 9%. Thecurrent market price of the bond is Rs960. Bond Y will…
Company A has 279,000 basic shares outstanding and 26,000 outstanding options and warrants. The exercise price of these options is $3.75. The company also has $200,000 of convertible bonds with an effective conversion price of $4.00. The average market share price for the reporting period is $7.50. What is the diluted shares outstanding using the treasury stock method & if-converted methods
Report inc as a shipping company with securities listed on the American stock exchange. The company has the following capital structure : Equity Common shares ($1 per share nominal value) Reserves $m $m 40 85. 125 Debt 5.5% unsecured bond ($100 per bond nominal value 55 20 year secured bank loan. 25 5%preference shares ($1 per share nominal value). 30 Total equity and debt 110 235 The common share have a beta of…
A firm has 1 million shares outstanding with a book value per share of $10 per share. The stock sells for a price of $20 per share. The firm’s bonds have a par value of $8 million and are currently selling at a price of 120 percent of par. What is the appropriate proportion of equity to use in the WACC calculation? 71.4 percent 51.0 percent 55.6 percent 48.0 percent 67.6 percent
A company has the following information in its statement of financial position. Ghs'm Ordinary shares of Ghs5 250 12% unsecured bonds 100 The ordinary shares are currently quoted at Ghs 13 each and the bonds are trading at Ghs720 per Ghs1,000 nominal. The ordinary dividend of Ghs 1.50 has just been paid with an expected growth rate of 10%. Assume corporation tax is currently 16.5%. Calculate the WACC for this company

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