續 "Finance 既長問題 part A"...
The project is considered to have a similar level of risk to the other oil exploration and production projects currently being undertaken by the company. The company expects to raise $12,500,000 through a rights issue of new ordinary shares. The company will raise an additional $10,000,000 through an issue of listed corporate debentures which will yield a before-tax return of 10.00% for investors. The $2,000,000 net working capital requirement will be sourced from the company’s ongoing line of credit facility with the National Australia Bank which has an 8.00% before-tax interest rate cost. The company’s ordinary shares have a current traded price of $4.28 and will pay a forthcoming annual dividend of $0.40, with long-term growth in dividends of 4.00% expected in the future.
Required:
a)Determine the appropriate weighted average cost of capital (discount rate) that the company should employ in evaluating this new oil extraction project.
b)Using the discount rate calculated above, determine the net present value (NPV) of the oil extraction project for ROC Oil Limited. Note, it is acceptable to use a rounded discount rate in the tables for NPV calculation purpose.
(3 + 7 = 10 marks)
Finance 既長問題 part B
2009-02-03 6:01 pm
回答 (2)
2009-02-04 8:35 pm
✔ 最佳答案
(a) The WACC has 3 components1. cost of equity: [0.4x(1+0.04)]/4.28 +0.04 = 13.71962616822%
2. cost of debt 1: [0.1x(1-0.3)] = 7%
3. cost of debt 2: [0.08x(1-0.3)] = 5.6%
Total fund = $12,500,000 + $10,000,000 + $2,000,000
=$24,500,000
We = $12,500,000/$24,500,000= 0.510204081632653
Wd 1 = $10,000,000 /$24,500,000 =0.408163265306122
Wd 2 = $2,000,000 /$24,500,000=0.0816326530612245
WACC = We*cost of equity +Wd1*cost of debt1+Wd2*cost of debt2
WACC=0.103140949837879 = 10.3141%
b) The inital capital for the project =
$1,200,000+$20,000,000+$2,500,000+$2,000,000 = $25,700,000
yearly depreciation cost for the oil drillng facility = (20,000,000-8,000,000)/20 = 600,000
yearly depreciation cost for the housing facility = 2,500,000/20=125,000
Profit tax for every year = (4,450,000 - 600,000-125,000)*0.3 = 1,117,500
Profit tax for year 20 = 0 as the accounting profit will be negative for this project
Yearly activity cash flow = $(80-45)*150,000 - $800,000 -1,117,500= $3,332,500
Cash flow for the final year (year20) = 4,450,000+2,000,000+8,000,000-5,000,000 = 9,450,000
discount rate = i = 10.3141%
NPV = - 25,700,000 + 3,332,500*[1-(1+i)^-19]/i +9,450,000/(1+i)^20
=$2,932,597.52
2009-02-03 8:13 pm
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促進體內的自我潔淨功能，令消化系統更健康
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維護消化系統功能的正常運作，確保腸胃的潔淨
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我做文職, 133磅, 160CM用咗簡單經濟既方法!,月減左20磅, 改善頭痛,胃痛, 暈車浪,靜脈曲脹,越來越fit!面色仲好過以前!
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收錄日期: 2021-04-16 23:19:12
原文連結 [永久失效]:
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