Reference no: EM131130746

If EuroAsia's beta is estimated at 1.1, what is its weighted average cost of capital? If EuroAsia's beta is estimated at 0.9, significantly lower because of the high demand for automobile parts, what is its weighted average cost of capital? Petro-U.K. (U.K.). Petro-U.K. is a British energy firm that needs to raise 150 million to finance expansion projects. Suppose that Petro-U.K. is seeking a capital structure comprising 30% debt and 70% equity. The corporate tax rate in the U.K. is 21%. Petro-U.K. finds that it can raise finance in the domestic London stock market as follows: both debt and equity would have to be sold in multiples of 50 million (30% debt and 70% equity). For equity and debt respectively, the financing costs are 8% and 6% on the U.K. market and 10% and 8% on the Latin American market. A consultancy firm advises Petro-U.K. that incremental finance could be raised in multiples of 50 million (maintaining the 30/70 capital structure). Each increment of cost would be influenced by the total amount of capital raised. For equity and debt respectively, the first increment of 50 million (30% debt and 70% equity) would cost 10% and 8% on the U.K. market and 12% and 10% on the Latin American market. The second increment of 50 million would cost 12% and 10% on the U.K. market and 16% and 14% on the Latin American market. Calculate the lowest average cost of capital for each increment of 150 million of new capital, where Petro-U.K. raises 45 million in the equity market and an additional 105 million in the debt market at the same time. If Petro-U.K. plans an expansion of only 75 mil­lion, how should that expansion be financed? What will be the weighted average cost of capital for the expansion? Mobi-SA (South Africa). Mobi-SA is a large mobile phone provider based in South Africa. It has not entered the Nigerian marketplace yet, but is considering establishing network and distribution facilities in Nigeria through a wholly owned subsidiary. It has approached two different investment banking advisors, Standard Chartered Bank of South Africa and First Bank of Nigeria, for estimates of what its costs of capital would be several years into the future when it planned to list its Nigerian subsidiary on the Nigerian stock exchange. Using the following assumptions by the two different advisors, calculate the prospective costs of debt, equity, and the WACC for Mobi-SA. Using the following assumptions by the two different advisors, calculate the prospective costs of debt, equity, and the WACC for Mobi-SA: Xiaomi's Cost of Capital. Xiaomi has rapidly grown during the last five years to become one of the largest smartphone manufacturers. Having most of its sales in China, its average annual sales over the last five years amounted to around 100 billion Chinese yuan (CNY). Now that the company is planning on expanding into global markets outside China, it needs to carefully measure its weighted average cost of capital in order to make prudent decisions on new investment proposals. Assuming a risk-free rate of 4.375%, an effective tax rate of 29%, and a market risk premium of 5 %, what is the estimated weighted average cost of capital for its two competitors ChiFoSmart and ChinaFone? How can you estimate a comparable WACC for Xiaomi?