Calculate the total market value of the firm

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Western Electric has 35,000 ordinary shares outstanding at a price per share of $47 and a rate of return of 13.5%. The firm has 5,000 preference shares paying 7% dividend outstanding at a price of $58 a share. The preferred share has a par value of $100. The outstanding bond has a total face value of $450,000 and currently sells for 102% of face. The pre-tax yield-to-maturity on the bond is 8.49%.

Required:

Question a) Calculate the total market value of the firm.

Question b) Calculate the capital structure of the firm.

Question c) Calculate the firm's weighted average cost of capital if the tax rate is 30%, assuming a classical tax system.

Reference no: EM132557974

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