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Cost of equity wacc and unleveared cost of equity

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Need to calculate the cost of equity, wacc, and unleavered cost of equity for senior housing Properties trust. I have downloaded the financial statements for this company.

Cathy Kendall
Unit One Individual Project: Financial Analysis Introduction
FIN620-1101C

Senior Housing Properties Trust
Consolidated Statement of Income
(In thousands, Except Per Share Amounts)

Year Ended December 31,
2009 2008 2007
Revenues
Rental income 296,777 233,210 185,952
Interest and other income 1,003 2,327 2,070
Total Revenues 297,780 235,537 188,022

Expenses:
Property operating expenses 14,273 2,792 -
Interest 56,404 40,154 37,755
Depreciation 78,583 60,831 47,384
Acquisition Costs 3,327 - -
General and Administrative 20,345 17,136 14,154
Impairment of assets 15,530 8,379 1,400
Loss on early extinguishment of debt - - 2,026
Total Expenses 188,462 129,292 102,719

Income before gain of sale of properties 109,318 106,245 85,303
Gain on sale of properties 397 266 -
Net Income: 109,715 106,511 85,303

Weighted average shares outstanding 121,863 105,153 83,168

Basic and diluted earnings per share:
Income before gain on sale of properties $0.90 1.011 1.03
Gain on sales of properties - - -
Net Income $0.90 1.011 1.03

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Solution Summary

The cost of equity WACC and unlevered cost of equity is examined.

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Hi,

Get the answer with attachment.

---------

Answer:
We have,
Beta of Senior Housing Properties Trust=1.10 (Yahoo! Finance)
Debt /Equity (2009)=$1,087,276/$1,900,650=0.57
Tax rate=35% (assumed)
Risk free rate=0.05% (3 month t-bill ...

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Jayant Kumar, MBA
Education
  • MBA, Indian Institute of Finance
  • Bsc, Madras University
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