Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. question 7 8 marks a company has 1,000,000 shares

Question 7 8 Marks A company has 1,000,000 shares outstanding, and each share is currently worth R20....

60.1K

Verified Solution

Question

Finance

Question 7 8 Marks
A company has 1,000,000 shares outstanding, and each share iscurrently worth R20. The shares have beta of 1.2. The company alsohas 10-year bonds outstanding with a par value of R10,000,000, acoupon rate of 6%, and yield-to-maturity of 7%. The yield on thebonds is currently 2 percentage points above the risk-free rate and4 percentage points below the expected return on the overallmarket.
Required:
7.1. What is the company’s WACC if the corporate tax rate is35%?

Answer & Explanation Solved by verified expert
4.2 Ratings (540 Votes)
Market Value of Equity No of Shares Outstanding Share Price 1000000 R20 R20000000 To find the market value of debt we need to put the following values in the    See Answer
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

Medical Sciences
1.2K views

Neuroscience approaches and neuroimaging allow us to do all but which of the following: Compare cognitively healthy...

Psychology
1.2K views

Kunnan’s blood glucose level ........... Kunnan’s beta cells in the ......... release .......... Kunnan’s cells allow .............

Biology
1.2K views

ALL directions to earn full credit for this lab This assignment is Criteria To earn...

Physics
1.2K views

1 A thin semicircular conducting ring of radius R is falling with its plane vertical...

Basic Math
1.2K views

In circle C with the measure of arc BD 120 find m BCD B Answer...

Calculus
1.2K views

For each function determine the long run behavior x 1 x 2 x 1 x...

Algebra
1.2K views

16 Solve the equation below 1 4 k 1 2 2k k k 2

Accounting
1.2K views

At December 31, 2020, Sarasota Company reported the following as plant assets. Land...

Accounting
1.2K views

Adventure Company uses the aging of accounts receivable method...

Accounting
1.2K views

9. Should Software be added as capital asset?If yes, what would be the asset (CCA)...

Accounting
1.2K views

in May 1, 2021, Yellow Company issued a note payable to Chase Bank in the...

Accounting
1.2K views

Tami Tyler opened Tamis Creations, Incorporated, a small manufacturing company, at the beginning of the...