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SOLUTION QUESTION 3 1. Shares a) PVD (1+g)/(i-g) = ($0.60 * 1.05)/(.15 - .05) = $6.30 b) Total Market Value = $6.30 * 25m
SOLUTION QUESTION 3 1. Shares a) PVD (1+g)/(i-g) = ($0.60 * 1.05)/(.15 - .05) = $6.30 b) Total Market Value = $6.30 * 25m = $157.5m = c) ke 15% (as given) 2. Overdraft a) Market Value = $15m = b) kod 9% (as given) c) Kod 9% (1.36) = 5.76% 3. Bonds = a) Market Value = $1.2m * A 10,.05 + $30m * 1.05-10 = $27.7m = b) k 1.0521 = 10.25% c) K 10.25% (1-.36) = 6.56% WACC = 15% 157.5/200.2 + 5.76% * 15/200.2 + 6.56% * 27.7/200.2 = 13.14% V 157.5+ 15 +27.7 = 200.2
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Financial Markets and Institutions
Authors: Frederic S. Mishkin, Stanley G. Eakins
8th edition
013342362X, 978-0133423624
