Reference no: EM132908238

A) Here is the capital financing structure of Omega Inc.Loans:

• Loan of $ 8M at a nominal rate of 8.25% compounded quarterly;

Obligations:

• Issue of 10,000 bonds ($ 1,000 face value) at a coupon rate of 8% with semi-annual interest payments (every 6 months), issue charge on the face value of 11.5%. For financing, you should consider that the bonds will have a maturity date (maturity) of 25 years

Ordinary actions:

• 500,000 shares issued at $ 15 / share, paying an annual dividend of $ 0.90 per share on which (dividend) an annual growth of 10% is expected;

Non-Distributed Profits:

• $ 10,000,000 recorded on the company's balance sheet.

You are asked to determine the after-tax weighted average cost of capital (WACC), knowing that the corporate tax rate = 32%?

B) You want to buy a bond in the markets today that will offer you an annual (effective) return of at least 9%. Which of these choices (if any) offers the best opportunity to meet your expected return goal?

- Bond A, can be purchased at $ 945 and offers a coupon rate of 8.5% (semi-annual installments) and the maturity is 16 years.

- Bond B, can be bought at $ 1,135 and offers and offers a coupon rate of 13.5% (semi-annual installments) and the maturity is 8.5 years.

C) You take out a loan of $ 32,000 from your financial institution. You are paid an interest rate of 6% compounded monthly. The bank requires monthly repayments over a period of 2 years. A loan amortization table is needed for this loan.

i. How much will your monthly payments be?

ii. How much interest will be repaid in period 15 (at the end of the 15th month)? And what will be the amount of principal repaid for this same period?

iii. What is your loan balance then (at the end of the 15th period)?