Option A
Weighted Average cost of capital | ||||
Finance | Amount in Millions | Proportion to total finance | Rate of interest | Proportionate Rate of interest |
Equity | 5 | 62.50% | 15.00% | 9.38% |
Mezzanine finance | 2 | 25.00% | 9.50% | 2.38% |
senior Debt | 1 | 12.50% | 7.00% | 0.88% |
Total | 8 | 12.63% |
Imported Questions - 10/05/2017 2:02 PM Review Later What is the weighted average cost of capital...
1 What is the weight of capital for ABC Limited which has the following capital structure? Review Later $5m of equity with a cost of equity of 1 596; $2m of mezzanine finance with a cost of 9.5%; $1 m of senior debt with a cost of debt of 796 13.73% 8.63% 9.56% 12.63% 12 What is the expected share return given the following macro-economic probabilities? Probability of recession 20%-Share return 596; Probability of steady state 60% . Share return...
1.What is (WACC), why is it used? 2. Why the weighted average cost of capital (WACC) is used in capital budgeting? 3. Estimating the costs of different capital components—debt, preferred stock, retained earnings, and common stock? 4. How to combine the different component costs to determine the firm’s WACC? 5. Cost of Equity: CAPM, what is it used for?
HELP WACC CALCULATIONS 1. Part A: Compute the Weighted Average Cost of Capital (WACC). Points: 10 G=Wardent DEBT Category DEBT Amount Weight Interest % Weighted Cost WA Ea Long-Term Debt 1990 Bond 1998 Bond 2007 Bond 2011Bond $ $ $ $ 25,000,000.00 15,000,000.00 17,000,000.00 17,550,000.00 8.25% 7.90% 9.00% 9.00% WACD Equity Preferred Stock Common Stock Retained Earnings $ $ 9.00% 6.00% 11,000,000.00 25,000,000.00 $ 65,000,000.00 10.50% WACE WACC TotalDebt/Equity $ 175,550,000.00 Hint: Part C PVIF 1- Part B: A thinking...