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Big Data Ltd currently has the following capital structure: Debt: $3,500,000 paying 9.5% coupon bonds outstanding with an annual before-tax yield to maturity of 9%
Big Data Ltd currently has the following capital structure: Debt: $3,500,000 paying 9.5% coupon bonds outstanding with an annual before-tax yield to maturity of 9% on a new issue. The bonds currently sell for $107 per $100 face value. Ordinary shares: 75,000 shares outstanding currently selling for $80 per share. The firm expects to pay a $9.50 dividend per share one year from now and is experiencing a 5% growth rate in dividends, which it expects to continue indefinitely. The firm's marginal tax rate is 30%. Required: a) Calculate the current total market value of the firm. (2 marks) b) Calculate the capital structure and weighted average cost of capital (WACC) for the firm
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