To look for the company’s WACC for the level of danger in the
project. A debt-equity ratio of 0.78 suggests a weight of debt of 0.78/1.78 and
a weight of equity of 1/1.80, so the company’s WACC is:
WACC = (0.78/1.78) (0.0780) + (1/1.78) (0.1460)
= 0.03417978 + 0.08202247
WACC = 0.1162 or 11.62%
Answer:
bond market value $660
Explanation:
We need to calculate the present value of the maturity and the cuopon payment using the effective rate of 9.7%
First we do the annuity:
C 24.25 (1,000 face value x 4.85 bond rate / 2 )
time 24.00 (12 year 2 payment a year)
rate 0.04850 (current rate divide by 2 to get it annually)
PV $339.55
Then present value of the maturity
Maturity 1,000.00 the face value of the bond
time 24.00
rate 0.04850
PV 320.89
Finally we add them together:
PV coupon payment $339.5545
PV maturity $320.8910
Total $660.4455
rounding to nearest dollar
bond market value $660
Answer:
$64.76
Explanation:
The current share price can be determined by calculating the present value of the dividend
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
Cash flow from year 1 to 13 = 9.45
I = 10.7
PV = 64.76
To find the PV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute