Calculate the after-tax cost of the company bond and share

Assignment Help Accounting Basics
Reference no: EM133005768

Question - 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).  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: EM133005768

Questions Cloud

Secret photos of customers of the restaurant : Leo is a permanent part-time employee at Hairy Jakes' Pancake Hut Kew branch, where he works as a server on weekday afternoons. Hairy Jakes' Pancake Hut Pty Ltd
Management mentor from department : You are a member of the team that helped hire a group of staff for Chloe's project and her management mentor from her department.
Thoughts on learning experience in course : As we approach mid-term, share thoughts on learning experience in this course so far. What's going well? What have you found most interesting/challenging?
How can we use the broader view of things : What is the concept, Pertinent Negative as it relates to our personal behaviors and perceptions
Calculate the after-tax cost of the company bond and share : The company tax rate is 30%. (Please include all workings). Calculate the after-tax cost of the company's bond and share
Organisational policies and legal requirements : How do you ensure that managers and supervisors follow selection procedures that accord with organisational policies and legal requirements?
Compile a detailed report on the nature of an excess : Compile detailed report on the nature of an excess, how it should accounted for and effects of its recognition on subsequent consolidated financial statements
Assignment on covid-19 crisis : COVID-19 crisis: Response management guide and your own research to support the evaluation.
Record the transactions in the general journal : Using the periodic inventory system, record the above transactions in the general journal of WeAreFashion for the month of January

Reviews

Write a Review

Accounting Basics Questions & Answers

  What is prime cost per unit

Each chair required 2.2 hours of direct labor at P8.90 / hour. A total of P53,845 of factory overhead was traced to Order 610. What is prime cost per unit

  Which ratio or concept describes the exten

Which ratio or concept describes the extent to which the government has lived within its means for the year?

  What were total assets and total stockholders equity

What is the value for other comprehensive net income (or net loss), accumulated deficit, and/or retained earnings. How are these values changing?

  Reciprocity under the cost method

During the calendar year 2011, S Company earned $840,000 evenly throughout the year and declared a dividend of $300,000 on November 1. What is the amount needed to establish reciprocity under the cost method in the preparation of a consolidated wo..

  What would a price taker emphasize

If we do so, we can sell the product for $90, we will incur additional costs of $407,500, and we can sell 20,000 units. Which of the following is true?

  Determine account balances of the T accounts

Determine account balances of the T accounts. Accounts containing a single entry only (such as Prepaid Insurance) do not need a balance

  Construct a cost-volume-profit chart

Weill Inc. anticipates fixed costs of $240,000, a unit variable cost of $80, and a unit selling price of $120. Construct a cost-volume-profit chart

  How to provide the journal entries at july and june

Provide the journal entries at 1 July 2018 and 30 June 2019. On 1 July 2018 BMW Ltd issues $2 million in 10-year debentures that pay interest each six months.

  Compute the amount of the total property tax levy

Compute the amount of the total property tax levy, Compute to the nearest cent the property tax rate

  What amount of cash would keaton and meador have received

Keaton, Lewis, and Meador share profits and losses in a ratio of 2:4:4. What amount of cash would Keaton and Meador have received

  Prepare a new income statement for the year

During the accounting period, 17,000 units were manufactured. Prepare a new income statement for the year using variable costing. Comment on the differences

  Statutory implied conditions of satisfactory quality

Consider whether the following statements are true or false: If a manufacturer gives a guarantee with his goods, he will be bound to the end-user to meet the terms of the guarantee - True/False?

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