THIS IS MY THIRD TIME UPLOADING THIS…
IS THERE ANYONE WHO CAN SOLVE THIS?
Pür Copper Corp. is a publicly traded company listed on the TMX. The company has 20,000,000 common shares outstanding and current stock price is $30 per share.
According to Pür Copper’s balance sheet as at December 31st 20XX:
Pür Copper is considering investing in a new project that will require external financing. The project is as risky as the existing operations of the firm.
Given current market circumstances, Pür Copper could raise new equity and debt under the following conditions:
Remember 1% = 100 basis points
What is Pür Copper Corp.’s marginal cost of capital (MCC)?
Follow the below steps:
Step 1: Calculate the Cost of Debt ki (after tax and after flotation costs)
Calculate the Coupon Rate for New Bonds:
Step 2: Calculate the Cost of Preferred Equity kp
Calculate the Preferred Dividend Dp
Step 3: Calculate the Cost of New Common Equity kne
Calculate the Net Proceeds per share NPe
Step 3: Solve for the weights: B/V, P/V and E/V
Calculate the Bond to Value B/V weight to 4 decimal places
Step 4: Calculate the MCCNote: MCC = WACC for the next dollar raised (for a given capital structure)
Calculate the MCC to 4 decimal places