Calculate the after-tax cost of the company bond

Assignment Help Financial Accounting
Reference no: EM132919607

Corella Ltd. is mid-cap manufacturing company. Corella currently has bonds with a face value of $15 million which pay a half yearly coupon rate of 8% p.a. and will mature in four years. The market yield on these bonds is currently 8% p.a. Corella also has 10,000,000 ordinary shares on the market currently trading at $2.75 per share. The beta coefficient for the ordinary share is 1.2, return on the market is estimated to be 16% p.a. and the risk-free rate is 4% p.a. The company tax rate is 30%. (Please include all workings). 

Problem 1: Calculate the after-tax cost of the company's bond and share. Calculate the weighted average cost of capital (WACC) of Corella Ltd.

Reference no: EM132919607

Questions Cloud

Exporting crude oil from united states to china : Give an executive summary on exporting crude oil from United states to China. Give resources too.
Why although a rights issue allows shareholders to purchase : Critically discuss why although a rights issue allows shareholders to purchase shares below market value, it may not increase shareholder value.
How the concepts of global strategic management : How the concepts of Global Strategic Management be applied to real-world situations and increase the chances of career or life success once understood?
Describe a business problem with an it solution : Identifying and cfrom your work or personal experience. I don't understand the nature of the assignment.
Calculate the after-tax cost of the company bond : Calculate the after-tax cost of the company's bond and share. Calculate the weighted average cost of capital (WACC) of Corella Ltd.
Negative impacts of switching to green computing : What are some of the major positive and negative impacts of switching to green computing at major corporations? Explain each positive/negative impact in detail.
How even npv can be unreliable when projecting : How even NPV can be unreliable when projecting. Most financial experts will agree that net present value is the best capital budgeting method.
Explain nine services that promote unicate : Explain nine services that promote unicate and give examples.
Popularity of managed care program : Given the increased popularity of managed care program for both the private and public sectors of the Nation. Are these plans beneficial or detrimental to the i

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd