User Account

All Pages

Equity and weighted average cost of capital

Assignment Help Finance Basics
Reference no: EM131550834

Natref is looking into the acquisition of Marine Oils. Marine Oils has 1 (one) million shares outstanding and a target capital structure of 30% debt, its beta is 1.4. Marine Oils has R10.82 million in debt trading at par value and pays 8% interest. Marin Oils free cash flow (FCFo) is R2 million per year and it is expected to grow at constant rate of 5% a year. Marine Oils pays 40% corporate tax. The risk free rate of interest is 5% and the market risk  premium is 6%. Natref needs to estimate intrinsic value of Marine Oils before making a final decision on this proposed acquisition.

  1. What are Marine Oils' cost of equity and weighted average cost of capital?
  2. What is Marine Oils' intrinsic value of operations?
  3. What is the current intrinsic value of Marine Oils' stock?

Reference no: EM131550834

Questions Cloud

How people generally tend to talk about the social problem : Describe how people generally tend to talk about this social problem and how these approaches are problematic, supporting with resources.
Determine the optimum mix for the decision variables : Determine the optimum mix for the decision variables to maximise Cumulative Discounted Cash Flow.
Decrease cigarette smoking : What are the critical questions that you need to have answered? Provide at least five such questions. What kind of research you will do to answer
Revise the introduction and literature review : The purpose of this assignment is to revise the introduction and literature review of your academic argumentative research paper
Equity and weighted average cost of capital : What are Marine Oils' cost of equity and weighted average cost of capital? What is Marine Oils' intrinsic value of operations?
Describe and apply concept and logic of elementary statistic : Describe and apply the concepts and logic of elementary statistics. Conduct statistical analysis in SPSS (Statistical Package for the Social Sciences).
Explain about the current and potential process performance : Lengths of steel shafts are measured by a laser gauge that produces a coded voltage proportional to shaft length (above some reference length).
Amount that should appear on garza balance sheet : Based on the above information, calculate the amount that should appear on Garza's balance sheet at December 31, 2010, for inventory.
Journal entry write dr for debit and cr for credit : You are to provide the missing closing entry. For each journal entry write DR for debit and CR for credit.

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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