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提问人：网友wlg9889 发布时间：2022-01-07

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The equity beta of Fence Co is 0·9 and the company has issued 10 million ordinary shares.

The market value of each ordinary share is $7·50. The company is also financed by 7% bonds with a nominal value of $100 per bond, which will be redeemed in seven years’ time at nominal value. The bonds have a total nominal value of $14 million. Interest on the bonds has just been paid and the current market value of each bond is $107·14.

Fence Co plans to invest in a project which is different to its existing business operations and has identified a company in the same business area as the project, Hex Co. The equity beta of Hex Co is 1·2 and the company has an equity market value of $54 million. The market value of the debt of Hex Co is $12 million.

The risk-free rate of return is 4% per year and the average return on the stock market is 11% per year. Both companies pay corporation tax at a rate of 20% per year.

Required:

(a) Calculate the current weighted average cost of capital of Fence Co. (7 marks)

(b) Calculate a cost of equity which could be used in appraising the new project. (4 marks)

(c) Explain the difference between systematic and unsystematic risk in relation to portfolio theory and the capital asset pricing model. (6 marks)

(d) Discuss the differences between weak form, semi-strong form. and strong form. capital market efficiency, and discuss the significance of the efficient market hypothesis (EMH) for the financial manager. (8 marks)

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更多“The equity beta of Fence Co is 0·9 and the company has issued 10 million ordinary shares.”相关的问题

第1题

Barwell Co had 10 million ordinary shares in issue throughout the year ended 30 June 20X3. On 1 July 20X2 it had issued $2 million of 6% convertible loan stock, each $5 of loan stock convertible into 4 ordinary shares on 1 July 20X6 at the option of the holder.Barwell Co had profit after tax for the year ended 30 June 20X3 of $1,850,000. It pays tax on profits at 30%.What was diluted earnings per share for the year?

A、$0.167

B、$0.185

C、$0.161

D、$0.17

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第2题

At 1 May 20X3, Dustin had 600 million $1 ordinary shares in issue. It made a rights issue of 1 new ordinary share for every 5 held at $3.50 on 1 September 20X3. Its profit before tax for the year was $600m and the income tax expense for the year was $150m. The share price immediately before the rights issue was $4.00. Dustin’s EPS for the year ended 30 April 20X3 was 45c. Required: (1)Calculate the basic EPS for the year ended 30 April 20X4. Give your answer in cents. (2) Calculate the comparative basic EPS that would be presented in the financial statements for the year ended 30 April 20X4. Give your answer in cents.

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第3题

Waffle Co had share capital of $7.5 million in 50c equity shares at 1 October 20X6. On 1 January 20X7 it made an issue of 4 million shares at full market price immediately followed by a 1 for 3 bonus issue.The financial statements at 30 September 20X7 showed profit for the year of $12 million.What was the earnings per share for the year?

A、$0.50

B、$0.49

C、$0.51

D、$0.52

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第4题

What are the following points in regard to your note-taking( )

A、Your position in the lecture theatre.

B、The lecturer's use of voice language.

C、The lecturer's use of body language.

D、Lecture language.

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第5题

The statement of financial position of Pinto Co at 31 March 20X7 showed property, plant and equipment with a carrying amount of $1,860,000. At 31 March 20X8 it had increased to $2,880,000.During the year to 31 March 20X8 plant with a carrying amount of $240,000 was sold at a loss of $90,000, depreciation of $280,000 was charged and $100,000 was added to the revaluation surplus in respect of property, plant and equipment.What amount should appear under 'investing activities' in the statement of cash flows of Pinto Co for the year ended 31 March 20X8 as cash paid to acquire property, plant and equipment?

A、$1,640,000

B、$1,440,000

C、$1,260,000

D、$1,350,000

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第6题

An 8% $30 million convertible loan note was issued on 1 April 20X5 at par. Interest is payable in arrears on 31 March each year. The loan note is redeemable at par on 31 March 20X8 or convertible into equity shares at the option of the loan note holders on the basis of 30 shares for each $100 of loan. A similar instrument without the conversion option would have an interest rate of 10% per annum. The present values of $1 receivable at the end of each year based on discount rates of 8% and 10% are: End of year 8% 10% 1 0.93 0.91 2 0.86 0.83 3 0.79 0.75 Cumulative 2.58 2.49 What amount will be credited to equity on 1 April 20X5 in respect of this financial instrument?

A、$5,976,000

B、$1,524,000

C、$324,000

D、$9,000,000

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第7题

The following policies have fixed cash value are

A、term life incurance

B、whole life insurance

C、universal life insurance

D、investment life insurance

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第8题

On June 30, 2013, Hardy Corporation issued $10 million of its 8% bonds for $9.2 million. The bonds were priced to yield 10%. The bonds are dated June 30, 2013, and mature on June 30, 2020. Interest is payable semiannually on December 31 and July 1. How much should the bond discount be reduced for the six months ended December 31, 2013?

A、$32,000

B、$40,000

C、$46,000

D、$60,000

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第9题

Quer falar connosco?你有事找我们？请问connosco是什么的连写？

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第10题

Witch Co acquired 70% of the 200,000 equity shares of Wizard, its only subsidiary, on 1 April 20X8 when the retained earnings of Wizard Co were $450,000. The carrying amounts of Wizard Co's net assets at the date of acquisition were equal to their fair values apart from a building which had a carrying amount of $600,000 and a fair value of $850,000. The remaining useful life of the building at the acquisition date was 40 years.Witch Co measures non-controlling interest at fair value, based on share price. The market value of Wizard Co shares at the date of acquisition was $1.75.At 31 March 20X9 the retained earnings of Wizard Co were $750,000. At what amount should the non-controlling interest appear in the consolidated statement of financial position of Witch Co at 31 March 20X9?

A、$193,125

B、$195,000

C、$196,875

D、$191,500

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