Reference no: EM133059724
Jamdown Manufacturing, Inc, a U.S. multinational company, has the following debt components in its consolidated capital section. Jamdown's finance staff estimates their cost of equity to be 12% for $60,000,000 and 14% for $39,000,000 . Current exchange rates are also listed as follows
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Spot rate (euro/$)
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0.8000
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Spot rate ($/pound)
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1.9500
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Spot rate ($/Yen)
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0.01
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Assumptions
10-year euro bonds (euros) €6,000,000 10%
20- Year yen bonds (yen) ¥1,000,000,000 6%
2-year pound bonds (pounds) £10,000,000 8%
25-year US$ bond (US$) $40,000,000 10%
5-year US$ euronotes $24,000,000 7%
Shareholder's Equity $99,000,000
Income taxes are 30% around the world after allowing for credits.
- Calculate Jamdown's weighted average cost of capital.
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