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6. The following data refers to Company Z: - Beta = 0.9 - Required return on debt (yield to maturity on a long term bond)
6. The following data refers to Company Z: - Beta = 0.9 - Required return on debt (yield to maturity on a long term bond) = 3.2% - Tax rate = 21% - 30-year government bond = 2.1% - Market risk premium can be assumed to be 5% Current Capitalization (Millions of USD) Currency Million USD Shares Price $ 36.7 Shares Outstanding 78.9 Market Capitalization 2,895.6 - Cash & Short Term Investments 29.0 + Total Debt 625.0 + Pref. Equity - + Total Minority Interest - =Total Enterprise Value (TEV) 3,491.6 Book Value of Common Equity 457.0 + Pref. Equity - + Total Minority Interest - + Total Debt 625.0 Total book capital 1,082.0 Estimate the cost of capital (WACC) for Company Z. (15 points) WACC =
| 6. The following data refers to Company Z: | ||||
| - Beta = 0.9 | ||||
| - Required return on debt (yield to maturity on a long term bond) = 3.2% | ||||
| - Tax rate = 21% | ||||
| - 30-year government bond = 2.1% | ||||
| - Market risk premium can be assumed to be 5% | ||||
| Current Capitalization (Millions of USD) | ||||
| Currency | Million USD | |||
| Shares Price | $ 36.7 | |||
| Shares Outstanding | 78.9 | |||
| Market Capitalization | 2,895.6 | |||
| - Cash & Short Term Investments | 29.0 | |||
| + Total Debt | 625.0 | |||
| + Pref. Equity | - | |||
| + Total Minority Interest | - | |||
| =Total Enterprise Value (TEV) | 3,491.6 | |||
| Book Value of Common Equity | 457.0 | |||
| + Pref. Equity | - | |||
| + Total Minority Interest | - | |||
| + Total Debt | 625.0 | |||
| Total book capital | 1,082.0 | |||
| Estimate the cost of capital (WACC) for Company Z. (15 points) | ||||
| WACC = |
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Foundations of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
10th Canadian edition
978-1259024979
