Virtual University Assignment & problem solution: ::: vuaskari.com ::: Fin 622 MBA(1.5) Finance

Question No 1:

After Tax cost of debt

Company Name

Book Value

% of Book Value

Market Value

% of Market Value

Yield to Maturity %

Weighted Average

SNT Company

1,815,000

0.35

1,650,000

0.33

7.00

2.45

2.31

A & S Company

1,000,000

0.19

1,110,000

0.22

6.50

1.24

1.43

ZINC Corporation

2,350,000

0.46

2,285,000

0.45

5.00

2.30

2.25

Total

5,165,000

5,045,000

5.99

Weighted Average cost of debt rD₌ 5.99%

After tax cost of debt rD = r_D * (1- Tc)

After tax cost of debt rD = 5.99 * (1- 40%)

= 3.6

Q 2:

Ans:

Cost of equity

Cost of equity rE = r_RF + Beta ( r_M – r_RF)

= 0.09 + 2 (0.11- 0.09)

= 0.09 + 2 (0.02)

= 0.09 + 0.04

= 0.13

= 13%

Q 3:

Ans:

Cost of preferred stock

Cost of preferred stock r_P = DIV1/Po

= 28/2.24

Cost of preferred stock r_P = 12.5%

Q 4:

Ans:

Weights under book value

Net Capital = Preferred Stock + Common Stock + Debt

= 6,750,000 + 2,800,000 +5,165,000

= 14,715,000

Common Stock

Common Stock X_E = common share / Net Capital

= 6,750,000 / 14,715,000

= 0.46

= 46%

Perferrd Stock

X_P= preferred Stock / Net Capital

= 2,800,000 / 14,715,000

= 0.19

= 19%

Debt

X_D = Debt/ Net Capital

= 5,165,000 /14,715,000

= 0.35

= 35%

Q 5:

Ans:

Weights under Market Value

Net Capital = Preferred stock + common stock + debt

= 2.800, 000+ 8,718,750 + 5,045,000

= 16,563,750

Debt

X_D = Debt/ Net Capital

= 5,045,000 /16,563,750

= 0.30

= 30%

Common Stock

Common Stock X_E = common share / Net Capital

= 8,718,750 / 16,563,750

= 0.53

= 53%

Preferred Stock

X_P= preferred Stock / Net Capital

= 2,800,000 /16,563,750

= 0.17

= 17%

Q 6:

Ans:

Weighted Average Cost of Capital (WACC) under Book Balue

WACC = r_d * x_d + r_e * x_e + r_p * x_p

= 0.03594*0335+0.13*0.13*0.46+0.0125*0.19

=0.05980+0.0124 + 0.0238

= 0.096

Question no 7

Weighted average Cost of Capital (WACC) under Market Value

WACC = r_e * x_e* r_d * x_d + r_p * x_p

=0.13*0.53+0.03549*0.30+0.30+0.0125*0.17

=0.0689+0.0106+0.0213

= 0.1008

Date: Thu, 29 Dec 2011 02:46:27 -0600
Subject: Re: ::: vuaskari.com ::: My MCS 1st Semester Result
From: mc110402056@vu.edu.pk
To: vuaskari_com@googlegroups.com

plz help for the previous solved papers of mcs 1st semister

On Tue, Dec 27, 2011 at 4:21 AM, Marina Bano <marinabano6@gmail.com> wrote:

very good

On Tue, Dec 27, 2011 at 2:53 AM, mc110403369 Faisal Mahmood <mc110403369@vu.edu.pk> wrote:

what u said ?

On Tue, Dec 27, 2011 at 11:55 AM, mc110402591 Anam Khalid <mc110402591@vu.edu.pk> wrote:

yeh kyon???????

On Mon, Dec 26, 2011 at 10:49 PM, mc110403369 Faisal Mahmood <mc110403369@vu.edu.pk> wrote:

StudentID MC110403369

Name Faisal Mahmood

Course Title Total Marks % age Details
CS201 Introduction to Programming 40 25 63

CS402 Theory of Automata 40 26 65

CS601 Data Communication 38 14 37

ENG201 Business and Technical English Writing 35 13 37

MTH202 Discrete Mathematics 40 15 38

STA301 Statistics and Probability 38 11 29

On Mon, Dec 26, 2011 at 12:44 AM, mc110401961 Muhammad wasif Mushtaq <mc110401961@vu.edu.pk> wrote:

Asalam u Alikum, Friends. here is my resultttttttttttttttttttttttttttttttttttttttttt........................... ap logon ka kysa rhaaaaaaaaaaaaaaaaaaaaaa????????????????????????

--
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--
Anam Khalid
MCS 1st

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--
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This (Main) Group:http://groups.google.com/group/vuaskari_com?hl=en?hl=en
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--
We say, "Be one as Pakistani Nation and grow up for Pakistan's Future". Wish you all the best. Join www.vuaskari.com,
To post to this group, send email to vuaskari_com@googlegroups.com
Visit these groups:
This (Main) Group:http://groups.google.com/group/vuaskari_com?hl=en?hl=en
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Course	Title	Total	Marks	% age
CS201	Introduction to Programming	40	25	63
CS402	Theory of Automata	40	26	65
CS601	Data Communication	38	14	37
ENG201	Business and Technical English Writing	35	13	37
MTH202	Discrete Mathematics	40	15	38
STA301	Statistics and Probability	38	11	29

--
We say, "Be one as Pakistani Nation and grow up for Pakistan's Future". Wish you all the best. Join www.vuaskari.com,
To post to this group, send email to vuaskari_com@googlegroups.com
Visit these groups:
This (Main) Group:http://groups.google.com/group/vuaskari_com?hl=en?hl=en
MIT/MCS Group: http://groups.google.com/group/vu_askarimit?hl=en?hl=en
HRM Group: http://groups.google.com/group/askari_hrm?hl=en?hl=en
Banking Group: http://groups.google.com/group/askari_banking?hl=en?hl=en
Management: https://groups.google.com/group/vuaskari_mgt?hl=en
Marketing: https://groups.google.com/group/vuaskari_mkt?hl=en
MIS Group: http://groups.google.com/group/askari_mis?hl=en

Virtual University Assignment & problem solution

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Thursday, December 29, 2011

::: vuaskari.com ::: Fin 622 MBA(1.5) Finance

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