Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Show working for Both question pls MULTIPLE CHOICE The following information relates to Questions 12- 15 Craddy Ltd is financed through debt and equity. Currently,

Show working for Both question pls image text in transcribedimage text in transcribed

MULTIPLE CHOICE The following information relates to Questions 12- 15 Craddy Ltd is financed through debt and equity. Currently, a Cradd share sells for $10.50 and 1 million of these shares have been issued. Analysis indicates that the appropriate Beta for a Craddy share is 1.25. Further, the risk-free rate is 5% pa. and the expected market return is 13% pa. raddy has also issued 100,000 bonds. Each of these bonds has a face value of $100, three years to maturity, pay an annual coupon of 10% and currently trade for $105,154. Finally, Craddy has a bank loan with a balance of $2,000,000. The interest rate on this loan is 10% pa. Company tax rate is 30%. Question 14 What is the company's value? a. $11,575,000 b. $21,015,400 c. $23,015,400 d. $23,500,000 e. $42,000,000 Question 15 What is the company's WACC? 8.05% a. b. 9.25% 10.01% c. d. 10.30% 42.00% e

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Liquidated An Ethnography Of Wall Street

Authors: Karen Ho

1st Edition

0822345994,0822391376

More Books

Students also viewed these Finance questions