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BHP Billiton, An Australian company's stock, has a beta of 0 . 8 0 . The expected return on the market is 1 2 per
BHP Billiton, An Australian company's stock, has a beta of The expected return on the
market is per cent, and Treasury bills are yielding per cent. Further, the company
has a debt issue outstanding with years to maturity that is quoted at per cent of face
value. The issue makes semiannual payments and has an embedded cost of per cent
annually. It considers a debtequity ratio of and a per cent corporate tax rate. This
year, the company has an EBIT of $ million. Depreciation, the increase in net working
capital, and capital spending were $$ and $ respectively. You
expect that over the next five years, EBIT will grow at per cent per year, depreciation
and capital spending will grow at per cent per year, and NWC will grow at per cent
per year. It also has $ million in debt and shares outstanding. After Year the
adjusted cash flow from assets is expected to grow at per cent indefinitely.
Answer the following five questions based on the above information and enter only the
number as an answer, for example,
What is the cost of equity
What is the posttax cost of debt
What is the WACC
What is the value of the company $
What is the price per share $
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