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Company A. has issued 10,000 samurai bond with a 5.5% annual coupon rate, 25 years to maturity, a $1,000 face value, and a $1,250 market
Company A. has issued 10,000 samurai bond with a 5.5% annual coupon rate, 25 years to maturity, a $1,000 face value, and a $1,250 market price. The management has also decided to issue stocks in their capital structure decision, whereby:
- 150,000 shares of preferred stock with $2.5 annual dividend. The preferred stocks price is $33 /share.
- 555,000 shares of ordinary stock with price of $28 per share. The beta for compamy A stock is 1.3.
Assuming the Treasury bill-rate of 2.75%, and the S&P500 market return is 9.75%, while the tax rate is 25%. Calculate the following variables:
a. Find total value of the firm
b. Find the weighted (proportion) of bond, preferred-stock, and ordinary stock (
c. What is the Emperors WACC? (
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