The simplified balance sheet for the Dutch manufacturer

The simplified balance sheet for the Dutch manufacturer Rensselaer Felt (figures in thousands) is as follows: 

Cash and marketable Short-term debt 2,300 76,400 securities Accounts payable Accounts receivable 120,800 62,800 € 139,200 Inventory Current liabilities 125,800 Current assets € 248,900 Property, plant, and equipment Deferred taxes Long-term debt 212,800 209,400 45,800 88,200 Shareholders’ equity Other assets 247,100 € 595,700 € 595,700 Total Total 

The debt has an interest rate of 4.00% (short term) and 6.00% (long term). The expected rate of return on the company’s shares is 13.00%. There are 7.54 million shares outstanding, and the shares are trading at €54. The tax rate is 25%. Assume the company issues €50 million in new equity and uses the proceeds to retire long-term debt. Also assume the company’s borrowing rates are unchanged and the short-term debt is permanent. Use the three-step procedure. 

a. Calculate the cost of equity after the capital restructuring. 

b. Calculate the WACC after the capital restructuring.

 

How Our Website Works

1. FILL IN OUR SIMPLE ORDER FORM

It has never been easier to place your order. Fill in the initial requirements in the small order form located on the home page and press “continue” button to proceed to the main order form or press “order” button in the header menu. Starting from there let our system intuitively guide you through all steps of ordering process.

2. PROCEED WITH THE PAYMENT

All your payments are processed securely through PayPal. This enables us to guarantee a 100% security of your funds and process payments swiftly.

3. WRITER ASSIGNMENT

Next, we match up your order details with the most qualified freelance writer in your field.

4. WRITING PROCESS

Once we have found the most suitable writer for your assignment, they start working on a masterpiece just for you!

5. DELIVERY

Once finished, your final paper will be available for download through your personal dashboard. You will also receive an email notification with a copy of your paper attached to it. Sometimes, the writer may leave a note for you about the order in case there is any additional information that they need to give you.

Leave a Reply

Your email address will not be published.