Ch13_SSol - Problem 13.1 Winslow Manufacturing, Inc....

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Problem 13.1 Winslow Manufacturing, Inc. Assumption Value Tax rate 30.00% 10-year euro bonds (euros) € 6,000,000 20-year yen bonds (yen) 750,000,000 Spot rate ($/euro) 1.2400 Spot rate ($/pound) 1.8600 Spot rate (yen/$) 109.00 Weighted US Dollar Pre-tax Post-tax Component Component Amount Proportion Cost (%) Cost (%) Cost (%) 25 year US dollar bonds $10,000,000 12.77% 6.000% 4.200% 0.5363% 5 year US dollar euronotes 4,000,000 5.11% 4.000% 2.800% 0.1430% 10 year euro bonds 7,440,000 9.50% 5.000% 3.500% 0.3325% 20 year yen bonds 6,880,734 8.79% 2.000% 1.400% 0.1230% Shareholders' equity 50,000,000 63.84% 20.000% 20.000% 12.7680% Total $78,320,734 100.00% WACC = 13.9027% Winslow Manufacturing, Inc, a U.S. multinational company, has the following debt components in its consolidated capital section. Winslow's finance staff estimates their cost of equity to be 20%. Current exchange rates are also listed below. Income taxes are 30% around the world after allowing for credits. Calculate Winslow’s weighted average cost of capital. Are any assumptions
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This note was uploaded on 07/27/2011 for the course ECON 101 taught by Professor Dr. during the Spring '11 term at Columbia Union.

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Ch13_SSol - Problem 13.1 Winslow Manufacturing, Inc....

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