Question
Fawaz Abdulaziz Alhokair Company reported the following balance sheet: Cash 14 Accounts payable 42 Receivables 70 Other current liabilities 28 Inventories 280 Total CL 70
Fawaz Abdulaziz Alhokair Company reported the following balance sheet:
Cash | 14 | Accounts payable | 42 | |
Receivables | 70 | Other current liabilities | 28 | |
Inventories | 280 | Total CL | 70 | |
Total CA | 364 | Long-term debt (20 bonds) | 142 | |
Net fixed assets | 126 | Common equity (100 shares outstanding) | 278 | |
Total assets | 490 | Total liab. and equity | 490 | |
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1. The stock is currently selling for SAR 23 per share and there are 100 shares outstanding
2. Its bonds are 15-year bonds with 12%coupon rate paid annually and the face value of SAR 1,000. They are currenty selling at SAR 870
3. The required rate of return on its common stock is 11%.
4. Assume the firm's tax rate is 40%.
What is the WACC for AlHokair Company using Book value
weights?
a. The before tax cost of debt (rd) is ?% (use 2 decimals)
b. The weights of debt using book value ?% (use 2 decimals)
c. The cost of equity is ?% (use 2 decimals)
d. The WACC using the Book value weights is ?% (use 2 decimals)
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