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  • Submarine Sandwich Model

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    Aliza Rizvi
    83 views3 pages
    This document contains information about Samad Raza Khan's capital structure including the market value of long term debt, short term debt, preferred stock, and common stock. It shows that the total market value of capital is $434,922,705 with debt accounting for 44%, preferred stock 1%, and common stock 55%. It also includes break points and interest costs for amounts of new debt and equity.

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    Submarine Sandwich Model (1)

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    This document contains information about Samad Raza Khan's capital structure including the market value of long term debt, short term debt, preferred stock, and common stock. It shows that the total market value of capital is $434,922,705 with debt accounting for 44%, preferred stock 1%, and common stock 55%. It also includes break points and interest costs for amounts of new debt and equity.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    83 views3 pages

    Submarine Sandwich Model

    Uploaded by

    Aliza Rizvi
    This document contains information about Samad Raza Khan's capital structure including the market value of long term debt, short term debt, preferred stock, and common stock. It shows that the total market value of capital is $434,922,705 with debt accounting for 44%, preferred stock 1%, and common stock 55%. It also includes break points and interest costs for amounts of new debt and equity.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 3

    Name: Samad Raza Khan

    Roll Number: 22010092

    Market Value Based Capital Structure

    Debt
    Face Value 120,000,000
    Coupon Rate 9%
    Time to maturity 15
    Market rate 10%
    Bond Price $110,872,705
    Market Value of long term debt $110,872,705
    Market Value of short term debt 80,000,000
    Market Value of Debt $190,872,705

    Preferred Stock
    Cost of single preffered stock 9%
    Market Value of preffered stock 4,050,000

    Common Stock
    Current Stock Price $24
    Number of shares outstanding $10,000,000
    Market Value of Common Stock $240,000,000

    Market Value of total capital $434,922,705

    Weight of debt 44%


    Weight of Preferred Stock 1%
    Weight of Common Stock 55%
    Debt
    Amount of new debt Interest Cost Amount of new equity (Preferred) Interest Cost
    <=4 5% 2.1 to 3 10.50%
    >4 till 10 6% Over 3 13%
    10 to 14 13%
    Over 14 11%

    Break Point (5m) 11,393,004 Break Point (4m) 429,553,288


    Break Point (10m) 22,786,008
    Break Point (15m) 34,179,013
    Amount of new equity (Common) Interest Cost
    <= 2.5

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