Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. according to their 2022 annual report, qan have (a

According to their 2022 annual report, QAN have (approximately) $5.34b in long term debt and...

80.2K

Verified Solution

Question

Accounting

According to their 2022 annual report, QAN have (approximately) $5.34b in long term debt and (approximately) $7.96b in equity, giving total capital of $13.30b. Say that the QAN before tax cost of debt is 4.0%, their cost of equity is 6.5% and that QAN have a tax rate of 30%. 


(a) Calculate the weighted average cost of capital (WACC) for QAN.


(b) Say QAN has (before tax) free cash flow (FCF) per share of $0.75. Given this, calculate the value of QAN shares using the WACC from Part (a).


(c) If QAN decreased their financial leverage, would the value of the company most likely increase or decrease? Explain your answer.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students