ABN Lid., A company had 40 million shares at Rs.25 per share, and Rs. 32 million in debt outstanding at the end of 2019. The firm has a beta of 0.9, EBIT of Rs. 89 million and a book value of equity of Rs. 250 million. The following tables summarizes the interest rates for the company at different level of debt. Debt to capital ratio (%) Bond Rating 0 AAA 10 AAA 20 A 30 BB 40 B 50 B 60 CC 70 C 80 D 90 D Tax rate is 40%, Market risk premium is 5.5%, T-Bond rate is 6%. Note: Interest rate on debt will depend upon bond rating. The range of interest is given below. Kindly use it according to your assumption. Bond Rating Interest rate on debt (%) AAA 3.5 to 4 AA 4.1 to 5 A 5.1 to 6.1 BBB 6.2 to 7 BB 7.1 to 7.9 B 8 to 9 CCC 9.1 to 10 CC 10.1 to 10.6 C 10.7 to 11.4 D 11.5 to 12 You are required to calculate the cost of equity at each level of debt, return on equity at each level of debt and return on capital.
Looking for a Similar Assignment? Order now and Get 10% Discount! Use Coupon Code “Newclient”
The post ABN Lid., A company had 40 million shares at Rs.25 per share, and Rs. 32 million in debt outstanding at the end of 2019. The firm has a beta of 0.9, EBIT of Rs. 89 million and a book value of equity of Rs. 250 million. appeared first on Superb Professors.
Case study one page Case study one page Case study one page Case study one…
Business Calculus quiz that is 10 questions and has an hour time limit. Must be…
Write a 175- to 265-word response to the following: What constitutes “robust interoperability,†and what…
For this News Briefing Quest task , pick and analyze a U.S. political news article…
ACC 610 Milestone TwoGuidelines and Rubric This is the secondof three milestone assignments that will…
Please answer the questions in the attachment. I have sent you the required materials. Send…