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1. Sonique Ltd's capital structure is as follows:
3. Debt
4. 35%
5. Preference Shares
6. 15%
7. Ordinary Share Capital
8. 50%
10. Theafter-taxcostofdebtis7.5%;thecostofpreferencesharesis11%, andthecostofordinaryshare equityis13.5%.AsanalternativetotheexistingcapitalstructureforSonique,anoutsideconsultanthas suggested the followingmodifications:
12. Debt
13. 60%
14. Preference Shares
15. 5%
16. Ordinary Share Capital
17. 35%
19. Under this new and more debt-oriented arrangement, the after-tax cost of debt is 8.8%, the cost of preference shares is 11%, andthe cost of equity is 15.6%.
21. CalculateSonique'sexistingweighted average cost of capital(WACC).Your answer: a.%.Case sensitive: Type in 12.00 for 12.00%.
22. RecalculateSonique'sweightedaverage cost of capital (WACC), using the capital structure suggested by the outsideconsultant.Your answer:b.%.Case sensitive: Type in 12.00 for 12.00%.