Parts B and C only

1 2345 666981 10 11 A 234567002 12 due in 2012) 13 Total liabilities 14 Owners' Capital 15 16 17 18 19 21 22 23 238688 8583 24 25 27 29 30 Liabilities and Owners' Capital Current Liabilities Accounts payable Notes payable Other current liabilities" 31 32 Total current liabilities Long-term debt (7.5% interest paid semianually. B Common stock ($1 par value per share) Paid-in-capital Accumulated earnings Total owners' capital Total liabilities and owners' capital US Treasury Bond Yield Estimated Market or Equity Risk Premium Current Share Price Market value of owners' equity Current yield on the firm's long-term debt Current yield on the firm's short-term notes Dollar value of short term notes outstanding Corporate tax rate a. What are Harriston's capital structure weights? hin Harlink Entorni $ $ S S $ $ $ C PROBLEM 4-12 Given December 31, 2014 Balance Sheet (Book Values) 17,550,000 20,000,000 22,266,000 59,816,000 $ 5.42% 5.00% 78.00 D 20,000,000 650,000,000 $ 624.385.826 709,816,000 $ 644,385,826 8.50% 9,00% 20,000,000 35% Invested Capital (Market Values) 20,000,000 200,025,000 255,000,000 475,025,000 $ 1,560,000,000 1,184,841,000 $2.204,385 826 Solution 20,000,000 E 6 8 2 3 4 25 26 27 28 29 30 31. 32 33 34 35 36 37 38 39 40 6245561 43 44 4444560 47 8305NO 48 49 51 52 53 B Owners' Capital Common stock ($1 par value per share) Paid-in-capital Accumulated earnings Total owners' capital Total liabilities and owners' capital US Treasury Bond Yield Estimated Market or Equity Risk Premium Current Share Price Market value of owners' equity Current yield on the firm's long-term debt Current yield on the firm's short-term notes Dollar value of short term notes outstanding Corporate tax rate a. What are Harriston's capital structure weights? Enterprise value = Market capitalization + Debt Notes payable / Enterprise Value Long-Term Debt/Enterprise Value Equity / Enterprise Value Source of Capital Notes Payable Long-term Debt Equity $ $ b. What is Harriston's cost of equity capital using the CAPM? After-Tax Cost of Sources of Capital Notes Payable (after-taxes) Long-term Debt (after-taxes) Levered equity beta Equity (using the CAPM) c. What is Harriston's WACC? C 20,000,000 200,025,000 255,000,000 475,025,000 $ 1,560,000,000 1,184.841.000 $ 2,204 385,826 5.42% 5.00% 78.00 8.50% 9.00% 20,000,000 35% Solution D Capital Structure Weight (Proportion) 1.20 After-Tax Cost WACC E Weighted After Tax Cost