Reference no: EM132975389
You were given the following data regarding Apple Corp
Total equity = $100,000,000
Total debt = $50,000,000
After tax interest on debt = 6% per annum
Beta = 1.6
Current market price = $10/share
Expected selling price next year = $10.50/share
Expected dividend next year = $0.42/share
You have also found out from the website that the interest rate for Singapore Treasury Bill is 2.5%, and average market return is 7.5%
Question 1: What is the market risk premium?
Question 2: What is the required return for Apple Corp? What is the expected return for Apple Corp? Will you invest in shares of Apple Corp? Why?
Question 3: What is the weighted average cost of capital (WACC) for Apple Corp?
Question 4: Apple Corp has decided to increase its debt to $100,000,00 by taking a loan at after-tax interest rate of 8%. What is the WACC after this change? Should Apple Corp proceed with this change? Why?
Question 5: Apple Corp has decided to proceed with this $50,000,000 loan. Out of this amount, $30,000,000 will be used to pay dividend, and $20,000,000 will be kept in bank as fixed deposit which will earn 3.5% interest while waiting for opportunities to invest in viable projects. Discuss the appropriateness and the implications of its actions.
|
Discuss whether bob proposal is appropriate
: Discuss whether Bob's proposal is appropriate. Solar Industries develops and produces high-efficiency solar panels. The company has an outstanding $10,000,000
|
|
Calculate kogan free cash flow to equity holders
: Calculate Kogan's Free Cash Flow to Equity holders for 2019, 2020 and 2021. Leverage (defined as Assets/Equity) remains the same as it was in 2018
|
|
How many shares must john sell to make up the shortfall
: How many shares must John sell to make up the shortfall in dividend expected? Calculate John's total wealth from these shares after receiving the dividend
|
|
Explain whether dividend policy actually matter in practice
: Critically discuss M&M's proposition, including the assumptions behind it. Explain whether dividend policies actually matter in practice
|
|
What is the required return for apple corp
: Apple Corp has decided to increase its debt to $100,000,00 by taking a loan at after-tax interest rate of 8%. What is the WACC after this change?
|
|
What reported as carrying amount of trading securities
: In the December 31, 2018, statement of financial position, what should be reported as carrying amount of trading securities
|
|
What makes a good supervisor
: Human Ethical practice. What Makes a Good Supervisor?
|
|
What is the name of this period of time
: Luckily, she has about 20-25 days between her purchase and the time her credit card payment is due. What is the name of this period of time
|
|
What is jack percentage return from his strategy
: The current spot rate of the euro is $1.30. If the spot rate of the euro in one year is $1.20, what is Jack's percentage return from his strategy
|