4. Apple Inc. is a US-based technology company that plans to invest in a new research and development center in Europe and aims to
4. Apple Inc. is a US-based technology company that plans to invest in a new research and development center in Europe and aims to raise the required funds as follows: < < - - A bond issue of 6,000,000 bonds at a price of 98 USD per bond. The bonds carry a 2.75% coupon and a yield-to-maturity of 1.85%. < An equity issue of 900,000 shares at a price of 240 USD per share. Apple shares have a beta of 1.2. < Over the past 10 years, the Euro Stoxx 50 Index return was on average 3.5%. A German government bond's return is 0.2%. The corporate tax rate in the country where the research and development center will be located is 25%. wwwwwm < < 4.1. What capital structure is used to finance this project? < 4.2. What is the cost of capital raised to finance this project? (5 marks) < (8 marks) < 4.3. How much should the project generate annually for Apple Inc. to reach break-even? Assume an annuity of 10 years. 4. Apple Inc. is a US-based technology company that plans to invest in a new research and development center in Europe and aims to raise the required funds as follows: < < - - A bond issue of 6,000,000 bonds at a price of 98 USD per bond. The bonds carry a 2.75% coupon and a yield-to-maturity of 1.85%. < An equity issue of 900,000 shares at a price of 240 USD per share. Apple shares have a beta of 1.2. < Over the past 10 years, the Euro Stoxx 50 Index return was on average 3.5%. A German government bond's return is 0.2%. The corporate tax rate in the country where the research and development center will be located is 25%. wwwwwm < < 4.1. What capital structure is used to finance this project? < 4.2. What is the cost of capital raised to finance this project? (5 marks) < (8 marks) < 4.3. How much should the project generate annually for Apple Inc. to reach break-even? Assume an annuity of 10 years.
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