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Культура Документы
THEORIES
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
D
D
A
B
B
D
D
A
A
A
SOLUTIONS
Problem A:
1.
2.
Problem B:
1.
Problem C:
WACC
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2.
3.
Problem D:
1. CAPM
2. WACC:
Problem E:
1.
EPS =
EPS =
EPS = P4
WACC
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3.
Problem F:
1.
2.
Kn Ke = change
13.36% - 12.625% = 0.735%
3.
WACC
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Page 4
Problem H:
1. Cost of Retained Earnings
WACC
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*DEBT:(40%)
**EQUITY: (60%)
(RE):
NEW EQUITY:
P 1,200,000
(P 1,000,000)
P 200,000
DEBT:
40% =
RE:
50% =
NEW EQ:
10% =
800,000
WACC
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In the Last Peso WACC computation, the sources of fund to finance the last peso
expenditure include debt (if firm is levered) and cost of new issuance (if retained
earnings is not sufficient). As a rule, cost of new issuance will be included in WACC
last peso computation unless the retained earnings are enough to fund the equity
portion of CAPEX.
Problem I:
1. Cost of preferred stock new issuance:
The preferred stock is deemed as zero growth stock, thus, the cost of preferred shall be
computed without growth rate. However, the flotation cost percentage shall be incorporated
in the formula. The flotation cost is the additional cost of issuing new securities, whether the
said securities are debt or equity.
WACC
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