Question
Question 3. This question has three sub-questions: (a), (b) and (c) You are given with the following information about Wipro Hi-Tech company: Ordinary shares: The
Question 3. This question has three sub-questions: (a), (b) and (c)
You are given with the following information about Wipro Hi-Tech company:
Ordinary shares: The company has 10 million shares of common stocks, priced at $20 per share and the stock has a beta of 1.4. The stock market's average annual return is 11%, and the treasury bills are currently offering a yield to maturity of 4%.
Preference shares: 0.5 million shares of preferred stocks with face value of 100 per share, the market price for each share is $80; the company pays a fixed amount of $16 dividend for each share of the preferred stock.
Debt: 100,000 of bonds outstanding, with $1,000 par value for each bond, the bond's yield is 8%, and this bond is currently selling for 85% of par value.
Wipro's corporate tax rate is 35%.
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