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What is the market value of jupiter bonds

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Reference no: EM132765694

The following information relates to the Jupiter Mining Corporation Ltd.

  • Jupiter has 100,000 bonds outstanding with a face value of $100 each, which have 5 years to maturity and which pay an-annual 6% coupon. The yield on the bonds is 7% p.a. Jupiter's corporate tax rate is 30%.
  • Jupiter has 5 million preference shares on issue, which are currently trading for $2.75 each, giving a total market value of $13.75 million. They pay an annual dividend of 25 cents.
  • Jupiter has 7 million ordinary shares on issue, which are currently trading for $6.00 each, giving a total market value of $42 million. These shares are expected to pay an annual dividend of $0.75 next year, and this dividend is expected to grow at a constant rate of 2% in perpetuity.

Required:

Problem (a) What is the market value of Jupiter's bonds?

Problem (B) What is Jupiter's cost of preference shares?

Problem (C) What is Jupiter's cost of ordinary shares?

Problem (D) What is Jupiter's WACC?

Reference no: EM132765694

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