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A firm has a capital structure made up of P 2 0 million worth of equity and P 1 0 million worth of debt. The

A firm has a capital structure made up of P20 million worth of equity and P10 million worth of debt.
The dividend expected to be paid in the next period is 15thebe, the after-tax cost of debt is 15%, the
current market price is 80 thebe, and the growth rate is 12%.
Required:
(i) Calculate WACC. (5)
(ii) Given that the firm is contemplating to raise P10 million in new equity at 60thebe with floatation
costs of 4 thebe per share, calculate the cost of new equity and MWACC. (9

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