Case 1

PT Nusantara is financed with debt, preferred equity, and common equity with market values of $20 million, $10 million, and $30 million, respectively.

The betas for the debt, preferred stock, and common stock are 0.2, 0.5, and 1.1, respectively.

If the risk-free rate is 3.95 percent, the market risk premium is 6.01 percent, and the companys average and marginal tax rates are both 30%, what is the companys weighted average cost of capital?

Case 2

PT Kalimantan Hijau currently has debt with a market value of $300 million outstanding. The debt consists of 9 percent coupon bonds (semiannual coupon payments) which have a maturity of 15 years and are currently priced at $1,440.03 per bond. The firm also has an issue of 2 million preferred shares outstanding with a market price of $12.00. The preferred shares pay an annual dividend of $1.20. Imaginary also has 14 million shares of common stock outstanding with a price of $20.00 per share. The firm is expected to pay a $2.20 common dividend one year from today, and that dividend is expected to increase by 5 percent per year forever.

If the company is subject to a 40 percent marginal tax rate, then what is the firms weighted average cost of capital?

Case 3

A. With respect to a single issuance of debt, briefly explain why the book value of debt might not reflect the current cost of debt for a firm.

B. Apa dampak suku bunga acuan yang dikeluarkan oleh bank sentral terhadap cost of capital (WACC) perusahaan disuatu negara? Jelaskan dengan analisa dan contoh dengan mengacu pada kondisi pasar Indonesia.