Hi There.

Could you please show me the cost of equity, debt and WACC for the following scenarios with the provided information:

• There are currently 8,000,000 shares on issue. The shares are listed on the NZX and the last trade was at a price of $2.80.
• Retained earnings total $3,500,000.
• BB's bank debt of $6,000,000 costs it 4.0% p.a.
• BB's perpetual bond of $8,000,000 is issued at 6.0% and currently has a yield to maturity of 4.5%.
• The payment terms of both bank debt and the perpetual bond are interest only.

1) Scenario One:

Work out the equity, debt and WACC with the above information

2) Scenario Two:

Work out the equity, debt and WACC with the above information + a buy back of $4,000,000 worth of shares. It wants to keep cash on hand at $2,000,000 so it would fund the buyback through the issue of a new perpetual bond. It forecasts the interest rate would be 4.5%

3) Scenario Three:

Work out the equity, debt and WACC with the above information + a buy back of $6,000,000 worth of shares. It wants to keep cash on hand at $2,000,000 so it would fund the buyback through the issue of a new perpetual bond. It forecasts the interest rate would be 4.5%

Kind Regards

Chris