Calculate the value of qan shares using the wacc

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Question: According to their 2022 annual report, QAN have (approximately) $5.34b in long term debt and (approximately) $7.96b in equity, giving total capital of $13.30b. Say that the QAN before tax cost of debt is 4.0%, their cost of equity is 6.5% and that QAN have a tax rate of 30%.

(a) Calculate the weighted average cost of capital (WACC) for QAN.

(b) Say QAN has (before tax) free cash flow (FCF) per share of $0.75. Given this, calculate the value of QAN shares using the WACC from Part (a).

(c) If QAN decreased their financial leverage, would the value of the company most likely increase or decrease? Explain your answer.

Reference no: EM133474250

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