Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Can you help me identify all the Cost of debts of Sheng Siong from this financial statement 2019 Annual Report (https://shengsiongcontent.s3.ap-southeast-1.amazonaws.com/wp-content/uploads/2020/05/27145019/SSG_2019_Annual-Report.pdf) that are required to

Can you help me identify all the Cost of debts of Sheng Siong from this financial statement 2019 Annual Report (https://shengsiongcontent.s3.ap-southeast-1.amazonaws.com/wp-content/uploads/2020/05/27145019/SSG_2019_Annual-Report.pdf) that are required to compute WACC. Thanksimage text in transcribed

Calculation of Rd Business loans rates vary with the terms of the contract. However, you can use the publicly available information as an estimation. Review the Statement of Financial Position in the annual report and look at the Non-current liabilities. You need to identify maturity, security, variability and rate. Maturity - you will need to identify all the ones 1 year or less. These are to be ignored. We are only identifying the long-term debts. Typically, these would be in the borrowings section. You will have to read the notes to the items. Security - you need to identify if the borrowings are secured or not. Secured borrowings are at a lower rate. Variability - you need to identify if the various instruments are fixed or variable loans. You cannot use the interest repayments to "reverse' engineer the rate. Rate - need to establish the base rate. There is no fixed approach, but you can follow these guidelines. Make sure to do the work and show evidence of it in your case study. You cannot be awarded marks if you do not present your workings: Bonds- for bonds you must attempt to calculate the yield to maturity and use that as rate. The week 6 tutorial will cover the theoretical explanation on how to do it. You can use Thomson Reuters Eikon to source the bond yield to maturity. Next you need to rank the loans in order of risk and apply a margin for each loan. Doing some research to justify the margins will earn you full marks for this section. Look at the annual report for clues. Often they will mention the name of the bank or the rates used. If there are rates provided, you still have to go through the above steps and include a margin. nament Calculation of Rd Business loans rates vary with the terms of the contract. However, you can use the publicly available information as an estimation. Review the Statement of Financial Position in the annual report and look at the Non-current liabilities. You need to identify maturity, security, variability and rate. Maturity - you will need to identify all the ones 1 year or less. These are to be ignored. We are only identifying the long-term debts. Typically, these would be in the borrowings section. You will have to read the notes to the items. Security - you need to identify if the borrowings are secured or not. Secured borrowings are at a lower rate. Variability - you need to identify if the various instruments are fixed or variable loans. You cannot use the interest repayments to "reverse' engineer the rate. Rate - need to establish the base rate. There is no fixed approach, but you can follow these guidelines. Make sure to do the work and show evidence of it in your case study. You cannot be awarded marks if you do not present your workings: Bonds- for bonds you must attempt to calculate the yield to maturity and use that as rate. The week 6 tutorial will cover the theoretical explanation on how to do it. You can use Thomson Reuters Eikon to source the bond yield to maturity. Next you need to rank the loans in order of risk and apply a margin for each loan. Doing some research to justify the margins will earn you full marks for this section. Look at the annual report for clues. Often they will mention the name of the bank or the rates used. If there are rates provided, you still have to go through the above steps and include a margin. nament

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Essential Finance Guide

Authors: DK Publishing

1st Edition

078948157X, 978-0789481573

More Books

Students also viewed these Finance questions

Question

=+ (f) Show for 0 x 1 that D( A) =x for some A.

Answered: 1 week ago