ID no. 08

Question 1 TechValley Limited can borrow at an annual interest rate of 10% compounded semiannually with a compensating balance requirement of 4%. It can issue 12% Taka 100 preferred stock at Taka (100 + Last two digits of your ID Number) where floatation cost is 7%. The risk free rate is 4% and the market return is 15%. The firm's beta is 1.18. Tax rate is 30%. Expected Capital Components and their mix: Debt Taka 1200 million Preferred Stock Taka 1100 million Common Equity Taka 1700 million a. Estimate the cost of debt, cost of preferred stock and cost of retained earnings. b. Estimate the WACC. Question 1 TechValley Limited can borrow at an annual interest rate of 10% compounded semiannually with a compensating balance requirement of 4%. It can issue 12% Taka 100 preferred stock at Taka (100 + Last two digits of your ID Number) where floatation cost is 7%. The risk free rate is 4% and the market return is 15%. The firm's beta is 1.18. Tax rate is 30%. Expected Capital Components and their mix: Debt Taka 1200 million Preferred Stock Taka 1100 million Common Equity Taka 1700 million a. Estimate the cost of debt, cost of preferred stock and cost of retained earnings. b. Estimate the WACC