201 7-1.MMPA504.pdf-Adobe Acrobat Reader DC File Edit View Window Help Home Tools 2017_1 MMPA504...2016_1 MMPA504.. Sign In 2016 1 MMPA504.. 2016 3 MMPA504. Export PDF ^ Compass is an unlevered firm and is valued at $700,000. Compass is currently deciding whether including debt in its capital structure would increase shareholder value. The current cost of equity is 10% pa. Under consideration is issuing $400,000 in perpetual debt with a 7% pa. interest rate. Compass would repurchase $400,000 of stock with the proceeds of the debt issuc. There are currently 20,000 shares outstanding. The corporate tax rate is 28% and interest payments on debt are tax deductible. Adobe Export PDF Convert PDF Files to Word or Excel Online Required: a Calculate the market value of the firm after the recapitalisation. b) Calculate the market value of equity after the recapitalisation. c Calculate the number of shares outstanding after the recapitalisation. Select PDF File 2017_1_MMPA504.pdf (5 marks) Convert to (5 marks) Microsoft Word (doo) 5 marks) Document Language English (U.S) Change d) Calculate the firm's cost of levered equity after the recapitalisation. (5 marks) c Calculate the firm's weighted average cost of capital after the recapital isation. 5 marks) Convert Now assume Compass would issue $400,000 debt of which only S100,000 of the proceeds would be used to repurchase equity. The remainder would be added to the cash account. Create PDF Reguired Calculate the market value of the firm after the debt issue and repurchase of S100,000 equity Store and share files in the Document Cloud (5 marks) Learn More ENG 03:56 UK 22/02/2018 201 7-1.MMPA504.pdf-Adobe Acrobat Reader DC File Edit View Window Help Home Tools 2017_1 MMPA504...2016_1 MMPA504.. Sign In 2016 1 MMPA504.. 2016 3 MMPA504. Export PDF ^ Compass is an unlevered firm and is valued at $700,000. Compass is currently deciding whether including debt in its capital structure would increase shareholder value. The current cost of equity is 10% pa. Under consideration is issuing $400,000 in perpetual debt with a 7% pa. interest rate. Compass would repurchase $400,000 of stock with the proceeds of the debt issuc. There are currently 20,000 shares outstanding. The corporate tax rate is 28% and interest payments on debt are tax deductible. Adobe Export PDF Convert PDF Files to Word or Excel Online Required: a Calculate the market value of the firm after the recapitalisation. b) Calculate the market value of equity after the recapitalisation. c Calculate the number of shares outstanding after the recapitalisation. Select PDF File 2017_1_MMPA504.pdf (5 marks) Convert to (5 marks) Microsoft Word (doo) 5 marks) Document Language English (U.S) Change d) Calculate the firm's cost of levered equity after the recapitalisation. (5 marks) c Calculate the firm's weighted average cost of capital after the recapital isation. 5 marks) Convert Now assume Compass would issue $400,000 debt of which only S100,000 of the proceeds would be used to repurchase equity. The remainder would be added to the cash account. Create PDF Reguired Calculate the market value of the firm after the debt issue and repurchase of S100,000 equity Store and share files in the Document Cloud (5 marks) Learn More ENG 03:56 UK 22/02/2018