Reference no: EM131035031
Nile Inc
Nile Inc is considering an investment of capital to be raised from the issue of new ordinary shares and debentures in a mix which will hold its gearing ratio approximately constant. It wishes to estimate its weighted average cost of capital.
The company has an issued share capital of 1 million ordinary shares of $1 each; it has also issued $800,000 of 8% debentures. The market price of ordinary shares is $4.76 per share and debentures are priced at $77 per cent. Dividends and interest are payable annually. An ordinary dividend has just been paid; the next instalment of interest is payable in the near future. Debentures are redeemable at par in 15 years' time.
A summary of the most recent statement of financial position runs as follows:
|
$'000
|
|
$'000
|
$'000
|
|
Ordinary share capital
|
1,000
|
Non-current assets
|
|
1,276
|
|
Reserves
|
1,553
|
Current assets
|
4,166
|
|
|
Deferred taxation
|
164
|
Less: current
|
|
|
|
Debentures
|
800
|
liabilities
|
1,925
|
|
|
|
|
|
2,241
|
|
3,517
|
|
|
3,517
|
Dividends and earnings have been as follows:
Dividends (excluding tax credit) Earnings before tax Earnings after tax $'000 $'000 $'000
20X4 200 575 350
20X5 230 723 452
20X6 230 682 410
20X7 260 853 536
20X8 300 906 606
Assume that there have been no changes in the system or rates of taxation during the last five years, that the rate of corporation tax is 35% and that the standard rate of income tax is 30%. Assume that 'now' is 20X8.
Required
(a) Calculate Nile plc's weighted average cost of capital
(b) Discuss briefly any difficulties and uncertainties in your estimation
|
A full-wave rectifier circuit uses two silicon diodes
: A Full-wave rectifier circuit uses two silicon diodes with a forward resistance of 20Ω each. A dc voltmeter connected across the load of 1kΩ reads 55.4volts. Calculate i) IRMS, ii) Average voltage across each diode,iii) Ripple factor, and iv) Transfo..
|
|
Cost behavior patters of hte defendant in antitrust despute
: An expert is looking at the cost behavior patters of hte defendant in an antitrust despute. The expert plans to use the information to prepare a damage estimate. The expert looked at 30 months of cost and sale data for the dept store. How strong do y..
|
|
Final company report on adidas company
: All students will be expected to create an analysis of a company and prepare a Word document (your report) plus a PowerPoint presentation that summarizes the report.
|
|
Effects of the issuance of common and preferred stock
: Determining the Effects of the Issuance of Common and Preferred Stock, 11-3. Tandy, Incorporated, was issued a charter on January 15, 2014, that authorized the following capital stock: Common stock, no-par, 93,000 shares
|
|
Problem regarding the next instalment of interest
: Nile Inc is considering an investment of capital to be raised from the issue of new ordinary shares and debentures in a mix which will hold its gearing ratio approximately constant. It wishes to estimate its weighted average cost of capital.
|
|
What is the work of the organization or department like
: What is the work of the organization or department like? Who are the main members of the team, and what do they like in a colleague? What are their special interests? What is good and what is not so good about the job? What are the main challenges of..
|
|
How could this form of protest be used effectively today
: While using Dr. Martin Luther King Jr.'s "Letter from Birmingham Jail" as your primary text, explain the four steps of non-violent direct action. Why does King think that a direct action protest should "create crisis to force negotiation" and how ..
|
|
Determine if it can push the 550-lb log up the incline
: Assume the engine can develop enough torque to cause the rear wheels to slip.
|
|
Address how the article relates to the marketing concepts
: summarize the article and the remainder should address how the article relates to the concepts and principles covered in the course. The article may address any aspect of marketing.
|