Based in Winnipeg, Manitoba, Clearview Systems Ltd. (CVL) was founded to provide security systems, facilities controls and related services. CVL established a solid reputation for quality and the business grew thanks to strong relationships with large, long-term customers in Canada and the United States. The Research and Innovation Group (RIG) is the development side of the company. They are considering a new contract that will strain resources for not only RIG, but the entire company. With an upfront cost of $6.0 million, managers understand that the cost of capital will be a key part of maintaining and improving Clearview's competitive edge. You have been asked to calculate the company's weighted average cost of capital (WACC), based on the following information. Over the last five years the annual dividends on the firm's common stock have grown at 4.00 percent per year and this growth is expected to continue indefinitely. A common share dividend of $2.170 per share was recently paid. Common shares trade at $67.000 per share. The company has authorized 353,000 common shares, with 328,000 common shares issued and outstandin The company has issued 122,000 of the 155,000 preferred shares authorized. The annual preferred share dividend is $1.860 per share. The latest preferred The company has issued 122,000 of the 155,000 preferred shares authorized. The annual preferred share dividend is $1.860 per share. The latest preferred share price is $58.700 per share. CVL has an outstanding bond issue, payable semi-annually, that originally had a 25 year maturity. The initial bond offering was sold 9 years ago, at par and raised $12.60 million dollars. (To be specific 12,600 bonds were sold at $1,000 each.) The yield to maturity, when they were issued, was 5.40 percent. Currently, the nominal yield to maturity on bonds with a similar risk is at 5.47 percent. The company will use its current capital structure to set target weights for debt, preferred shares and common shares. Flotation costs are 4.00 percent for preferred shares, 4.00 percent for common shares and 4.00 percent for debt. The company's tax rate is 35.00 percent. After-tax earnings for the year will be $2.00 million and the company has a payout ratio of 30.00 percent. Use this information to answer the questions on the next spreadsheet tab. AQ21 Clearview Systems Ltd. (there are no marles associated with the information in this table) Bonds Pref Y O percent Dp: $ Te: O percent Pp: so FI o percent FI O percent Common D1: $0 PO: $0 O percent F: Opercent Support $0 Requirements: A. Find market values of outstanding bonds, preferred shares and common shares: 1. Bonds: a. What is the market value of each bond? (Enter your answer to two decimal places. leg. $12.34)) b. What is the total market value of bonds at Dec 31, 2020 (Round your answer to whole numbers. For example, $1.234,000 not $1.234 million./ $0 ! ! ! $0 2. Preferred shares: What is the total market value of preferred shares at Dec 31, 2020 [Round your answer to whole numbers. For example, $1,234,000 not $1.234 million. ) so Suppg 3. Common shares: What is the total market value of common shares at Dec 31, 2020 Round your answer to whole numbers. For example 51.234.000 not 51 234 million) 3. What weights are assigned to debt, preferred shares and common equity on Dec 31, 2020 (Round all your answers to two decimal places if you want to enter the number 12.34, for exemple, enter 12 34 (not 0.1234 and do not enter the percent sign) Debt Preferred Common Opercent O percent Opercent Supp Calculate the after-tax cost of the various components of WACC: Round all your answers to two decimal places if you want to enter the numbet 12.3456 1. Bonds a. What is the nominal yield-to-maturity? Question Sheet Answer sheet New O percent DY CK HERE TO SAVE YOUR WORK AS62 1. Bonds Supporting a. What is the nominal yield-to-maturity? b. What is the effective yield-to maturity? c. Calculate the after-tax cost of new debt (using the effective yield-to-maturity). O percent O percent Opercent 2. Preferred shares: Opercent 3. Common equity in the form of retained earnings: Opercent Opercent 4. Common equity in the form of new shares: D. What is the weighted Average cost of Capital if: (Round all your answers to two decimal places if you want to enter the number 12.34. 1. the company uses new debt, new preferred shares and just retained earnings? Supportin After-tax Cost Weights Debt Pref Common percent percent percent percent WACC 2. the company uses new debt, new preferred shares and new common shares? Supportir After-tak Cost Weights Debt Pret Common WACCI percent Support Question Sheet Answer sheet New BY Based in Winnipeg, Manitoba, Clearview Systems Ltd. (CVL) was founded to provide security systems, facilities controls and related services. CVL established a solid reputation for quality and the business grew thanks to strong relationships with large, long-term customers in Canada and the United States. The Research and Innovation Group (RIG) is the development side of the company. They are considering a new contract that will strain resources for not only RIG, but the entire company. With an upfront cost of $6.0 million, managers understand that the cost of capital will be a key part of maintaining and improving Clearview's competitive edge. You have been asked to calculate the company's weighted average cost of capital (WACC), based on the following information. Over the last five years the annual dividends on the firm's common stock have grown at 4.00 percent per year and this growth is expected to continue indefinitely. A common share dividend of $2.170 per share was recently paid. Common shares trade at $67.000 per share. The company has authorized 353,000 common shares, with 328,000 common shares issued and outstandin The company has issued 122,000 of the 155,000 preferred shares authorized. The annual preferred share dividend is $1.860 per share. The latest preferred The company has issued 122,000 of the 155,000 preferred shares authorized. The annual preferred share dividend is $1.860 per share. The latest preferred share price is $58.700 per share. CVL has an outstanding bond issue, payable semi-annually, that originally had a 25 year maturity. The initial bond offering was sold 9 years ago, at par and raised $12.60 million dollars. (To be specific 12,600 bonds were sold at $1,000 each.) The yield to maturity, when they were issued, was 5.40 percent. Currently, the nominal yield to maturity on bonds with a similar risk is at 5.47 percent. The company will use its current capital structure to set target weights for debt, preferred shares and common shares. Flotation costs are 4.00 percent for preferred shares, 4.00 percent for common shares and 4.00 percent for debt. The company's tax rate is 35.00 percent. After-tax earnings for the year will be $2.00 million and the company has a payout ratio of 30.00 percent. Use this information to answer the questions on the next spreadsheet tab. AQ21 Clearview Systems Ltd. (there are no marles associated with the information in this table) Bonds Pref Y O percent Dp: $ Te: O percent Pp: so FI o percent FI O percent Common D1: $0 PO: $0 O percent F: Opercent Support $0 Requirements: A. Find market values of outstanding bonds, preferred shares and common shares: 1. Bonds: a. What is the market value of each bond? (Enter your answer to two decimal places. leg. $12.34)) b. What is the total market value of bonds at Dec 31, 2020 (Round your answer to whole numbers. For example, $1.234,000 not $1.234 million./ $0 ! ! ! $0 2. Preferred shares: What is the total market value of preferred shares at Dec 31, 2020 [Round your answer to whole numbers. For example, $1,234,000 not $1.234 million. ) so Suppg 3. Common shares: What is the total market value of common shares at Dec 31, 2020 Round your answer to whole numbers. For example 51.234.000 not 51 234 million) 3. What weights are assigned to debt, preferred shares and common equity on Dec 31, 2020 (Round all your answers to two decimal places if you want to enter the number 12.34, for exemple, enter 12 34 (not 0.1234 and do not enter the percent sign) Debt Preferred Common Opercent O percent Opercent Supp Calculate the after-tax cost of the various components of WACC: Round all your answers to two decimal places if you want to enter the numbet 12.3456 1. Bonds a. What is the nominal yield-to-maturity? Question Sheet Answer sheet New O percent DY CK HERE TO SAVE YOUR WORK AS62 1. Bonds Supporting a. What is the nominal yield-to-maturity? b. What is the effective yield-to maturity? c. Calculate the after-tax cost of new debt (using the effective yield-to-maturity). O percent O percent Opercent 2. Preferred shares: Opercent 3. Common equity in the form of retained earnings: Opercent Opercent 4. Common equity in the form of new shares: D. What is the weighted Average cost of Capital if: (Round all your answers to two decimal places if you want to enter the number 12.34. 1. the company uses new debt, new preferred shares and just retained earnings? Supportin After-tax Cost Weights Debt Pref Common percent percent percent percent WACC 2. the company uses new debt, new preferred shares and new common shares? Supportir After-tak Cost Weights Debt Pret Common WACCI percent Support Question Sheet Answer sheet New BY