Question
Following information are taken from Lucky Lukes financial statements as well as the market data. What is the weight of long-term loan in the cost
Following information are taken from Lucky Lukes financial statements as well as the market data. What is the weight of long-term loan in the cost of capital?
| Face value of bonds | $50,000 | Market value of bonds | $54,500 |
| Coupon rate of bonds | 8% | Years to expiry of bonds | 5.5 |
| Book value of shares | $100,000 | Market value of shares | $150,000 |
| Number of shares | 5,000 | Expected Net Income | $20,000 |
| Payout Rate | 40% | Expected growth rate of earnings | 4% |
| Long-term Loan | $25,000 | Tax rate | 30% |
| Interest rate of loan | 7% |
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Passive Income The Passive Income Millionaire
Authors: Alexus Arellano
1st Edition
9814950882, 978-9814950886
