Q Billabong d currently has the following capital structure
Debt 4,000,000 outstanding bond that pays
annually 9% coupon rate with an annually before tax yield to maturity of 8% the bond issue has a face value of 1000 and will mature in 15years ordinary shares 60000 ordinary shares the firm expect to pay 8,5% dividend per share one year from now and is expecting 5% annual growth in dividend which is expected to continue indefinitely, the firm marginal tax rate is 30%
A) Calculate the current price of corporate bond?
B) Calculate the current price of ordinary share if the average return of the share is in the same industry is 11%?
C) Calculate the current total market value of shares?
D) Calculate the capital structure of the firm by identifying weight of debt financial of weight of shares?
E) Compute the weighted average cost of capital under the traditional tax for the firm using dividend cesyctantc growth model of calculation?
F) Assume that the company decide to convert their bonds to prefer shares with the same face value which promises on income of 15% fixed dividend each year compute present value of preference shares if expected do less type of other prefer shares is 12%?