T1 KCT 5 (Tutorial)

You've just rotated into the Qantas capital budgeting team as a

graduate recruit and the CFO has called the first acquisitions meeting of the

year.

Everybody is given the following capital structure and cost summary: 

Qantas has

equity of $10.5 billion and debt of $6.4 billion. Shareholders need to earn 16%

p.a., which is a 700 basis point premium above what creditors need to earn.

Vince, the CFO, then asks ...

     " Calculate

the WACC of Qantas.”

(enter your answer as a pure number percentage e.g. 11.11 without %, $ or commas, to 2 decimal places. Warning: not following these instructions may result in Moodle not being able to recognise your answer and auto-marking your answer as wrong. Do not enter the percentage as a decimal. e.g. 11.11% answer is typed in as 11.11, not 0.11, which is a decimal.)

Topic 1 EIC 2 (Lecture)

Monash Co. has a current WACC of 10%, which is going to change shortly due to a new interest rate it's lending bank will be charging.

Which of the following new WACCs would be preferred by Monash Co.? (Select all correct answers)

T4 EIC 4 (Lecture)

A project has the following cash flows:

Y0: -$1000     Y1: $100     Y2: $500      Y3: $800

Using a discount rate of 8%, calculate the NPV of the project. 

(enter your answer with a negative sign for -NPV, wihout a positive sign for +NPV, without $ or % or commas, to 2 decimal places. e.g. 888.88 or -888.88)

T4 EIC 1 (Lecture)

Given that Monash Co. capital creditors require a 10% return, which of the following returns on equity might be acceptable to shareholders? (select all correct answers)

T4 EIC 3 (Lecture)

A

company has debt that is 30% of capital. Equity holders earn 12%, which is a 4%

premium above what capital creditors require.

Calculate the WACC of the Company. (enter your percentage answer, not decimal answer, without $ or % or commas, to 2 decimal places. e.g. 888.88)

You are considering the following investment alternatives:

Term Deposit A: You invest $888 now for 2 years, where interest is calculated and paid monthly at 3% p.a.

Term Deposit B: In 1 years time, you invest $888 for 2 years, where interest is calculated and paid monthly at 3% p.a.

Calculate the Future Value of each deposit at maturity.

Comparing the Future Value of each deposit at maturity, which has the higher Value? 

You are thinking of buying a house in 3 years time and price of houses that you can afford then will be approximately $600,000.

The bank will lend you 80% of the price. This is called the LVR (Loan to Value Ratio). The remainder will be a deposit that you will have to contribute out of your own equity.

To save up for the deposit, you can invest a lump sum now into a 3 year term deposit which calculates and pays interest monthly at 4% p.a. 

How much will you have to invest now to accumulate a sufficient deposit in 3 years time?

Enter your answer as a pure number only, without $ or commas to 2 decimal places. e.g. if your answer is $105,445.54 it is to be entered as 105445.54

Not following this convention may result in the technology not recognising your answer.

Originally, Monash & Co had $10 million in capital of which half is equity. An additional $2 million of equity capital has been injected.

Due to less risk in the international student market, shareholders now need to earn 8% while creditors require a yield of 4%. 

Which of the following projects should Monash & Co. choose to send capital on? You can select multiple projects that allow Monash to spend all of it's capital but the combination of projects should earn a greatest return and you cannot over-spend.

Monash & Co has $10 million in capital of which half is equity. Shareholders need to earn 10% while creditors require a yield of 6%. 

Which of the following projects should Monash & Co. choose to send capital on? Select one project only and the best project.

Telstra has $20 million of debt and total capital of $50 million. If creditors require a 6% return (K_d) from Telstra debt and shareholders require a 8% return (K_e), what is the WACC? 

(Enter in your answer as a number only without the "%". Answer to 2 decimal places)