Sample Assignment on Corporate Finance

Running head: CORPORATE FINANCE
Corporate finance
Name of the student
Name of the university
Student ID
Author note

1CORPORATE FINANCE
Table of Contents
Answer a.....................................................................................................................................2
Answer b....................................................................................................................................3
Answer c.....................................................................................................................................5
Answer d....................................................................................................................................7
Reference....................................................................................................................................8

2CORPORATE FINANCE
Answer a.
Value of shares = 30,000,000 * $ 42 = $
Computation of weighted average cost of capital of CWC (Magni 2015)
Cost of equity –
Ke = Rf + β (Rm – Rf)
Where,
Ke = cost of equity
Rf = Risk free rate = 3.5%
Β = Beta = 2.639
Rm = Market return = 12.52%
Therefore,
Ke = 3.5 + 2.639 * (12.52 – 3.5)
= 3.5 + 23.8038 = 27.3038%
Therefore, Ke or cost of equity = 27.3038%
Cost of bond –
Annual interest rate = 10% * 2 = 20%
Maturity = 20 years
Present value = 50,00,000 * $ 92.34 = $ 46,17,00,000