Re: ::: vuaskari.com ::: acc501

T & S manufacturer is interested to measure its overall cost of capital. Firm raised capital through long term debt and Common Stocks. Weights of capital structure components are 45% for long term debt and 55% for common stocks. The firm is in the 40% tax bracket.

 

Common Stock: the firm's common stock is currently selling Rs. 500 per share. The firm expects to pay cash dividend Rs. 37.5 per share next year. The firm dividend has been growing at an annual rate of 6% and this rate is expected to continue in the future.

Long term Debt: Firm raised capital by issuing 10 years bonds at par value Rs. 1,000 with 8% coupon rate (coupons are paid annually). Bond is traded at Rs. 900 in market. Cost of debt after tax is 5.80 %.

 

You are required to answer the following:

1. Cost of Common Stock (Provide your answer in percentage and up to two decimal)

2. WACC (Provide your answer in percentage and up to two decimal)

Answer. 1 Cost of common cost is =13.5%

Answer. 2 WACC=8.991%

On Sun, Jul 3, 2011 at 4:30 PM, sehran zaib <sehran.friend@gmail.com> wrote:

i also need

On Sun, Jul 3, 2011 at 2:59 PM, roshni <mc100403573@vu.edu.pk> wrote:

assalamoalikum

i need gdb of acc501 solution or idea ... plz any one tell me or guide me ....

thanks

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i don't believe to take  r8 decision................just take decision.....and make dem r8!
SIDRA SAHAR
BSCS 2NS SEMESTER!

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