finacial business题目求解

finacial business题目求解
Smart Industries Ltd is trying to determine its cost of capital for capital budgeting purposes and has
asked you to assist.The company currently has 8,000 bonds outstanding paying a coupon of 7.5% p.a.
The bonds have a $1,000 par value and the coupon payments are semi-annual.The bonds are currently
selling for 92% of par and have 20 years to maturity.The company has 250,000 ordinary shares
outstanding,currently selling for $57 per share,and 15,000 9% preference shares outstanding with a par
value of $100,currently selling for $93 per share.The company also has a bank loan of $4 million with
12 ACC00152 – Business Finance
an interest rate of 7%.Smart has a tax rate of 30% and a beta of 1.05.It is expected that the company’s
current capital structure will remain the same.Treasury bonds are yielding 4.5% but some firms have
bonds on issue yielding as much as 18%.The market risk premium is expected to be 8%.
Prepare a memo to the CEO of Smart that provides the required information.State any assumptions you
make and ensure you present your analysis in such a way that the CEO will be able to easily follow what
you have done and any assumptions you have made.You should also briefly discuss the appropriateness
of your cost of capital as a discount rate for the company’s capital budgeting and the alternatives
available.
都是小问题,如果方便能发到邮箱吗？