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KJ Chapter 9 COC (Word)

The document outlines calculations related to the cost of capital, specifically focusing on preferred stock, equity, debt, and the weighted average cost of capital (WACC) for Chevron. It provides detailed formulas and examples for determining the cost of preferred stock, market value weights, and the cost of equity and debt. The final WACC for Chevron is calculated to be 6.92%.

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ZAFIRA RAMADANIA
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53 views3 pages

KJ Chapter 9 COC (Word)

The document outlines calculations related to the cost of capital, specifically focusing on preferred stock, equity, debt, and the weighted average cost of capital (WACC) for Chevron. It provides detailed formulas and examples for determining the cost of preferred stock, market value weights, and the cost of equity and debt. The final WACC for Chevron is calculated to be 6.92%.

Uploaded by

ZAFIRA RAMADANIA
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Asst.

Muthia Anggraeni & Zafira Ramadania

KJ Chapter 9

The Cost of Capital

P9-9 Cost of preferred stock

Dik : Dividen Rate = 6%

Par Value = $100

Sales Price : $98,5

FC = $3

a. Annual Dividend = Dividend Rate x Par Value


= 6% x $100
= $6

Net Proceeds = Current Price - Flotation Cost

= $98.5 - $3.00

= $95.5

Cost of Preferred Stock = Annual Dividend / Net Proceeds

= $6 / $95.5

= 0.0628 (6.28%)

b. Dik : Dividen Rate = 10%


Net Proceeds = $93

Annual Dividend = Dividend Rate x Par Value


= 10% x $100
= $10

Cost of Preferred Stock = Annual Dividend / Net Proceeds

= $10 / $93.00

= 0.1075 (10.75%)
Asst. Muthia Anggraeni & Zafira Ramadania

P9-19 Calculation of individual costs and WACC

a. Hitung bobot nilai pasar untuk struktur modal Chevron.


Market value of debt = bonds outstanding x market price per bond
= 28,247,195 × $1,087.40
= $30,715,999,843

Market value of C/S = shares outstanding x market price per share

= 1,865,864,238 × $92.22

= $172,070,000,028.36

Total Market Value = market value of debt + market value of common stock

= $30,715,999,843 + $172,070,000,028.36

= $202,785,999,871.36

Market value weight of debt = market value of debt / total market value

= $30,715,999,843 / $202,785,999,871.36

= 0.15147 = 0.1515 (15.15%)

Market value weight of C/S = market value of common stock / total market value

= $172,070,000,028.36 / $202,785,999,871.36

= 0.8485 (84.85%)

b. Hitung biaya ekuitas Chevron.


Dik : dividend in 2019 = dividend in 2014 × (1
+𝑔)n n = number of years = 5
g = dividend growth rate
$4.76 = $4.21 × (1 +𝑔)5

g = (6 )5 – 1 = 0.024861
1
4,7

4,2
1

Next, we calculate the dividend in 2020.


Dividen 2020 = dividend in 2019 x (1 +𝑔)1
= $4.76 × (1 + 0.024861)
= $4.878338
cost of equity = (expected next year dividend / current stock price) + growth rate

= ($4.878338 / $92.22) + 0.024861

= 0.07775 (7.78%)
Asst. Muthia Anggraeni & Zafira Ramadania

c. Hitung biaya utang sebelum pajak Chevron (before-tax cost of debt = YTM of bond)
M - Nd
I+ n
r Nd +
M2
1000 - 1,087.40
(1000 X 3.078%) +
30
rd = 1087.40 + 1000
2

rd = 0.026699 (2,67%)

d. Hitung WACC Chevron saat ini menggunakan tarif pajak perusahaan 21%.
WACC = (weight of debt x before−tax cost of debt x (1 − T)) + (weight of C/S x cost of C/S)
= (0.1515 × 0.0267 × (1−0.21)) + (0.8485 × 0.0778)
= 0.06920

The current WACC is 6.92

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