Final Exam (Part II) 50 points         
Given the following information for Syarikat Co., find the WACC. The company's tax rate is 35%.       
           
 Debt: 7,000 8% coupon bonds outstanding, 20 years to maturity, selling for 104% of par, bonds make semiannual payments    
 Common Stock: 120,000 shares outstanding, selling for $82 per share, beta is 1.20       
 Preferred Stock: 10,000 shares preferred stock outstanding, $8.25 dividend, currently selling for $80 per share     
 Market: 7% market risk premium and 4.5% risk-free rate        
           
 Syarikat Company        
 Tax Rate (T)35%        
           
Your task is the following:         
 To find the weighted average cost of capital. But in oder to do so, you must find all the other component costs first.     
For instance in the case of debt, you must know the coupon rate, par value, years to maturity, payment, number of bonds outstanding,    
current price, and total value of the debt and the cost of debt before and after tax. You MUST show each calculation and the the final cost of debt.     
To simplify matters for you, all the variables are listed in the box for cost of debt. The same thing applies to the other costs and for calculating the weights.    
Using all these information, you calculate the WACC.        
           
DebtCoupon Rate   Common StockP0     
 Par Value    Beta    
 Years to maturity    Market Premium    
 Payment ScheduleSemi-annual   Risk-free Rate    
 Number of bonds    Shares outstanding    
 Price as percent of par value    Total Value (# shares * share price)    
 Current Price (Par value * selling % of par)         
 Total Value (# bonds * price per bond)    rs = Rf +  (RM - Rf) βs    
           
 FV    Cost of Internal Equity rs    
 PV         
    Preferred StockP0     
 PMT     Shares outstanding    
 I/Y =    Dividend     
 Cost of Debt (Annual YTM ) rd =    Total Value (# shares * share price)    
           
WeightsTotal Market Value of the Firm = Total Value of Debt + Total Value of CS + Total Value of PS  rP = D / P0    
 Total Market Value of the Firm =           
      Cost of Preferred stock rP =     
 Weight of Debt wd = Value debt / value of the firim        
 Weight of CS wc = value of common stock / value of the firm  WACC = wc * rs + wp * rp + wd * rd * (1-T)    
 Weight of PS wp = value of preferred stock / value of the firm WACC =      
     WACC =      
           
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