Global Finance Andrea McDiffit& 7/5/18 852 PM Homework: Module IV-Practice Exerc
ID: 2823055 • Letter: G
Question
Global Finance Andrea McDiffit& 7/5/18 852 PM Homework: Module IV-Practice Exercises: Part B Score: 0 of 5 pts Problem 14-7 (algorithmic) 2ct 5 (2 complete) ? HW Score: 40%, 10 of 25 pts Oinston Help * Sunrise Manufacturing. Inc. Sunrise Manufacturing Inc, a U.S muitinational company, has the following detr components in it estrnates their Of equity to be 90%. Current exchange rates are assumptions implicit in your caloulation? consolidated capital setion, Sunvise's sharsholdens' equity s545,000 000 and Its a world aher alowingforenes, Caiculate Sunse's weghed ame cent of capta. Am any also ited ite tatie. Inome taxes are 40% around the What is Sunvrise's weighted average cost of capital? s(Round to two decimal places ?Data Table 25-year USS bonds -year USs bonds 10-year eurobonds (euros) 20-year yen bonds (yen) Before-tax cost of 25-year USS bonds Before-tax coso 5-year USS bonds Before-tax cost of 10 year eurobonds Before-tax cost of 20-year yen bonds Spot rate (S/E) Spot rate ? Spot rate (VS) $10,000.000 $5,000.000 750,000.000 6,0% 35% 1.8900 105.00 Pint Done Enter your answer in the answer box and then click Check Answer Clear All O Type here to searchExplanation / Answer
US Dollar
Amount
Pre-Tax
Cost(%)
Post-Tax
Cost(%)
Weighted
Component
Cost(%)
6%(1-0.4)
=3.6%
3.5%(1-0.4)
=2.1%
7,000,000 x 1.29
= 9,030,000
4%(1-0.4)
=2.4%
750,000,000/105
=7,142,857.14
2%(1-0.4)
=1.2%
Hence, Wacc = 12.23%
ComponentUS Dollar
Amount
ProportionPre-Tax
Cost(%)
Post-Tax
Cost(%)
Weighted
Component
Cost(%)
25 yr US$ bonds 10,000,000 0.1313 6%6%(1-0.4)
=3.6%
0.4726 5 yr US$ bonds 5,000,000 0.0656 3.5%3.5%(1-0.4)
=2.1%
0.1378 10 yr Eurobonds7,000,000 x 1.29
= 9,030,000
0.1185 4%4%(1-0.4)
=2.4%
0.2845 20 yr Yen bonds750,000,000/105
=7,142,857.14
0.0938 2%2%(1-0.4)
=1.2%
0.1125 Shareholders' Equity 45,000,000 0.5908 19% 19% 11.2245 Total 76,172,857.14 12.2320Related Questions
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