9-3 Jasper Ltd. has 1.5 million preferred shares outstanding that pay a...
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9-3
Jasper Ltd. has 1.5 million preferred shares outstanding that pay a $1.05 dividend and are currently priced at $23.25. The current share price of the firms common stock is $15.50. The company has paid a $0.75 dividend per share this week. The firms dividends are expected to grow by 4% per year thereafter. The company has 6.5 million ordinary shares outstanding. Jasper Ltd. has 17,505 of 9-year bonds outstanding and the going market rate for such bonds is 8.2%. the coupon payments are semi-annual at 7.6%. The firm is subject to a 25% corporate tax rate. The total book value of the companys equity is $132.35 million and $16.65 million for liabilities. In answering the questions that follow, you will need to show all workings and intermediate calculations along with the final answer. a. Calculate companys post-tax cost of debt. b. Compute the firms WACC based on the companys current capital structure.
9-4
Located in Fujairah, a company called Oasis Centre Ltd. has been listed on the Abu Dhabi Stock Exchange (ADX) since 12 December 2012. The company is financed with long-term debt and common equity only, so there is no preferred equity. The firm has 350,000 common shares outstanding, and the current share price of the firms common stock is $25. The Oasis Centre Ltd. will pay a $3.80 dividend per share one year from now, which is expected to grow by a constant 2% per year thereafter. The company has 4,000 of 15-year bonds outstanding. The current going market interest rate for bonds of a similar risk profile is 4%. The coupon payments on the bonds occur on an annual basis and are 6% of the bonds face value. The firm is subject to a 20% corporate tax rate. In answering the questions that follow, you will need to show all workings and intermediate calculations along with the final answer. a. Compute the price of the firms bonds. b. Based on the companys current capital structure, determine the firms WACC.
9-3
Jasper Ltd. has 1.5 million preferred shares outstanding that pay a $1.05 dividend and are currently priced at $23.25.
The current share price of the firms common stock is $15.50. The company has paid a $0.75 dividend per share this week. The firms dividends are expected to grow by 4% per year thereafter. The company has 6.5 million ordinary shares outstanding.
Jasper Ltd. has 17,505 of 9-year bonds outstanding and the going market rate for such bonds is 8.2%. the coupon payments are semi-annual at 7.6%.
The firm is subject to a 25% corporate tax rate.
The total book value of the companys equity is $132.35 million and $16.65 million for liabilities.
In answering the questions that follow, you will need to show all workings and intermediate calculations along with the final answer.
a. Calculate companys post-tax cost of debt.
b. Compute the firms WACC based on the companys current capital structure.
9-4
Located in Fujairah, a company called Oasis Centre Ltd. has been listed on the Abu Dhabi Stock Exchange (ADX) since 12 December 2012.
The company is financed with long-term debt and common equity only, so there is no preferred equity.
The firm has 350,000 common shares outstanding, and the current share price of the firms common stock is $25.
The Oasis Centre Ltd. will pay a $3.80 dividend per share one year from now, which is expected to grow by a constant 2% per year thereafter.
The company has 4,000 of 15-year bonds outstanding.
The current going market interest rate for bonds of a similar risk profile is 4%.
The coupon payments on the bonds occur on an annual basis and are 6% of the bonds face value.
The firm is subject to a 20% corporate tax rate.
In answering the questions that follow, you will need to show all workings and intermediate calculations along with the final answer.
a. Compute the price of the firms bonds.
b. Based on the companys current capital structure, determine the firms WACC.
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