Nthanda PLC is an international food retailing company
financed by both debt and equity capital. The total value of
company's equity is K26.4 million ex-dividend, currently quoted on
LUSE K120 cum-Div. The company has recently paid a total dividend
of K4million to its shareholders. This is in line with the
company's policy of increasing dividends by 5% per annum. Nthanda
has an equity beta value of 1.86. The yield on short-term
government debt is 7% and equity risk premium is 7.4%
Nthanda PLC has K50,000 9% irredeemable preference shares in issue
with a norminal value of each share K1. They are currently quoted
at 72 ngwee ex-dividend in the market. In addition, the company has
issued K12.6 million of 8% irredeemable bonds. They are currently
quoted at K80 ex-interest.
Corporate tax currently stands at 35%.
Required:
A)
(a). Calculate the cost of equity using the dividend
growth model
(b). Calculate the cost of equity using CAPM
(c). Calculate Nthanda's Preference shares.
(d). Calculate Nthanda's irredeemable bonds.
(e). calculate WACC for Nthanda PLC using book values.
(f). Calculate WACC using market values.
(g). Give three examples of corporate finance decisions and briefly
explain them.
B).
Nthanda PLC is an international food retailing company financed by both debt and equity capital. The...
corporate finance Nthanda PLC is an International food retailing company financed by both deo capital. The total market value of company's equity is K26.4 million ex-dividends, currently quoted on LuSE K120 cum-Div. The company has recently paid a total dividendo to its shareholders. This is in line with the company's policy of increasing dividends by 3% per annum. Nthanda has an equity beta value of 1.86. The yield on short-term government debt is 7% and equity risk premium is 7.4%....
Corporate finance I need WACC calculaed for Nthanda PLC using Book values and Market Values. Queshon DATE. PLC is an international financed by both clebt and of food retailing equity capital. Nthanda Company The total market value k 26.4 million ex-dividends, currently company's equilty is Luse k 120 cum-Dividend. The quoted on Company has recently pould a totale dividend of k 4 million to its Shareholders. This is in line with the Company's policy of increasing dividends by 5% per...
QUESTION 1 The following information is related to JT Company PLC (JT) as at 31st December 2018: Issued share capital of JT is $500 million and it comprises with 1,000,000 ordinary shares. JT is a quoted company and its current share price is $250. The dividend paid for the current year was $40 per share and growth rate of annual dividend payment is 5%. The retained earnings of JT were $100 million. JT has issued irredeemable preference shares for a...
Cost of Capital AnalysisNthanda Corporation Plans to embark into a New Market in Botswana. The risk profile in Botswana is considered not much different with the other projects in the company. However, the company should identify the justified discount rate for them to analyze the proposed investment in Botswana.The company has 1 million common shares outstanding with a cum-interest selling price of K11.25 per share with a 25 ngwee divided paid in the past year. Based on previous performance, the company has an expected growth...
The following is an extract from the balance sheet of Mapalo International Plc at 30 June 2006 K'000 Ordinary shares at 50n each 5,200 Reserves 4,850 9% Preference shares at K1 each 4,500 14% Debentures 5,000 Total long term funds 19,550 The ordinary shares are quoted at Bon. Assume that the market estimate of the next ordinary dividend is 4n, growing thereafter at 12% per annum indefinitely. The preference shares, which are irredeemable, are quoted at 72n and the debentures...
1. Londoni Kokowe Chombo PLC one of the companies listed on the LSE wishes to calculate its updated weighted Average cost of capital for use in their investment appraisal process ZMK Million 2,000 Issued share capital (K100 shares) 1,300 Share premium 145 Reserves Share Holders funds 3.445 6% irredeemable Debentures 1,400 9% Redeemable debentures 1,450 Bank loan 500 Total Long-term liabilities 3,350 The current cum interest market value per K100 unit is K103 and K105 for the 6% and 9...
Corporate Financial Management:The Cost of Capital 12. a. Eve Industries has a target capital structure of 41% ordinary equity, 4% preference shares, and 55% debt. Its cost of equity is 19%, the cost of preference shares is 6.5%, and the pre-tax cost of debt is 7.5%. If the firm has a tax rate of 34%, what is the firm’s Weighted Average Cost of Capital (WACC)? (20%) Phillips Equipment has 80,000 bonds outstanding that are selling at par. Bonds with similar...
(b) Calculate the WACC for the following firm: Debt: 40,000 bonds with coupon rate of 5% paid annually and face value of $100. The bonds are currently trading for $85 each and have 10 years until maturity. The yield to maturity of the bonds is 7.15% p.a. before tax. Common stock: 150,000 ordinary shares currently trading for $50 per share. The most recent dividend from the stock has been $5 per share and the dividend is expected to grow at...
Q.1) Atlanta plc has recently developed an innovative new range of equipment that is expected to lead to the company growing rapidly. It is expected that the company will grow at 12% per annum for five years. Over time, as the market share of this new equipment increases, the firm's growth rate will reach a steady state. At that point, the firm may grow at 2% per annum. Assume that the market required rate of retum on the stock is...
Shares in Lex plc are currently trading at £5.80 per share with an equity beta of 1.32. The current equity market premium and the risk-free rate of return are 6% and 1.35% respectively. In the last financial year Lex reported earnings before interest and tax (EBIT) of £240m and an interest cover ratio of 3.2. Lex’s outstanding debt finance totals £1200m The current capital structure of Lex comprises 45% debt and 55% equity. The corporate tax rate is 20.5% Required:...