Reference no: EM132386207
1. Assume that A limited paid a dividend of 21 cents per share just recently. The shares currently sell for $10.2. You also estimate that the dividend will grow steadily at 2.7 % per year into the indefinite future. What is the cost of capital, ke for A limited? Answer as a percentage accurate to two decimal places (11.32% should be entered as 11.32). Do not enter the % sign.
2. The 90 day bank bill rate is quoted as 4 in the financial press. What is the correct cost of capital kbb to be used in the WACC calculation. Express as a number accurate to four places (to the nearest basis point). Do not enter the % sign (eg 5.5671% should be entered as .0557).
3. Polycorp has a debt equity ratio of 0.55.What is the correct debt ratio D/V that should be used in the WACC formula?
WACC = ke x E/V + kd x (1-t) x D/V
Provide an answer as a decimal accurate to two decimal places eg 60.156% should be entered as .60
Do not enter the % sign.
4. A company has annual net operating cash flow (X) of 1.3 million dollars in perpetuity and the market value of its capital (V) is 10.1 million dollars. What is the company's cost of capital k o? Provide your answer as a percentage to two decimal places. Do not enter the % sign.
5. What is the cost of capital for bank overdraft (kbo). The overdraft rate is 8.8 % pa compounded 12 times a year? Answer as a percentage to two decimal places (2.12% should be entered as 2.14). Do not enter the % sign.
6. The next dividend for ABC Limited will be $0.6 per share (D 1). Investors require a 12 % return on companies such as ABC Limited. ABC's dividend increases by 5 % every year. Based on the dividend growth model what is the value of ABC Limited shares today? Price to the nearest cent. Do not enter the $ sign.
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: What is the cost of capital, ke for A limited? Answer as a percentage accurate to two decimal places (11.32% should be entered as 11.32). Do not enter the % sig
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