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Heritage Corp. is a public company in the field of Lifestyle that has been operating for more than 20 years. The company is currently considering
Heritage Corp. is a public company in the field of Lifestyle that has been operating for more than 20 years. The company is currently considering opening a new branch in New york, and as a business analyst, you are required to make a feasibility study of this business plan. One of your tasks is to calculate the weighted average cost of capital (WACC) used for the capital budgeting analysis for this project, which has a risk similar to the risk of the company as a whole. Based on available data, the current risk-free rate is 4.5% and the market risk premium is 12%. The company has a beta of 1.4. The price per share at the last closing was IDR 7,500 and there were 12,000,000 shares outstanding. The company's debt consists of bonds with a value of 110% with a par value of IDR100,000,000 and a term of 12 years. The number of bonds outstanding is 500. The coupon rate is 10% p.a., and coupons are paid semiannually. The corporate tax rate is 25%. Based on the information above: a. Calculate cost of equity b. Calculate the cost of debt c. Calculate the total market value of equity and debt d. Calculate the company's weighted average cost of capital
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