Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Techie Technology Company (TTC) is a publicly traded technology company that specializes in the creation and maintenance of finance and accounting software programs for a

Techie Technology Company (TTC) is a publicly traded technology company that specializes in the creation and maintenance of finance and accounting software programs for a variety of specialty areas. These areas include real estate management, the medical field, and education. Each software package is tailored to meet the needs of the particular industry for the client. The company is currently evaluating its current capital structure, as well as the tax implications of this structure. The company is considering numerous changes to its capital structure. These changes include issuing new stock to pay back debt, attaining new debt to buy back stock equity, and the tax impacts of each decision. Information on the different scenarios is outlined below.

TTC wants to gain a starting point as to where they are currently. As of today, the company has $3.2 billion in debt, total equity capitalization of $51 billion, and an equity beta of 1.26. Included in TTC's assets are $14.6 billion in cash and risk free securities. The company is currently is experiencing a risk free rate of interest at 4% and a market risk premium of 5%. Based on this information, address the questions below.

What is TTC's enterprise value?

What is the beta of TTC's business assets?

What is the WACC of TTC?

Please show formulas how you got to the answers.

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

International Financial Reporting Standards An Introduction

Authors: Belverd Needles, Marian Powers

2nd edition

053847680X, 978-1111793234, 1111793239, 978-0538476805

More Books

Students also viewed these Finance questions

Question

Should the IFRS be adopted in the United States?

Answered: 1 week ago

Question

What is an organizations structure, and what does it consist of?

Answered: 1 week ago