Question
Answer the following questions ,thanks.,,, An investor is to pay 80, 000 for a property. The investor will then be entitled to receive rental payments
Answer the following questions ,thanks.,,,
An investor is to pay 80, 000 for a property. The investor will then be entitled to receive rental payments at the end of each year for 99 years. The rental payment will be fixed for the first 33 years, increasing to double the original amount for the next 33 years, and three times the original amount for the remaining 33 years. The value of the property at the end of the 99 years is expected to be 1, 500, 000. Calculate the amount of the rent payable in the first year, if the investor expects to obtain a rate of return of 8% pa effective on the purchase .
Assume the following information for a company:
There are 5 million ordinary shares. Analyst consider it normal to double your money in four years in this industry. The share last traded at $9 per share.
-An overdarft of $20 million attracts an interest rate of 30% pa compounded monthly.
-90-days bank bills have just been issued with Face Value of $20m and a yield of 12% pa.
-Bonds exist with a total face value of $30m, a market value of $30m, a coupon of 2% pa paid semi-annually and a 10 years to maturity.
- The company account show $5m in retained earnings and $2m in trade credit ( accounts payable).
-The corperate tax is 30%
Calculate the Weighted average cost of capital on an after-tax basis. What limitations apply to the use of this WACC?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started