Question
Assume the capital structure of a multidirectional firm is as follows Debit is 35% Preferred shares 15% Ordinary shares 50% The following data are also
Assume the capital structure of a multidirectional firm is as follows Debit is 35% Preferred shares 15% Ordinary shares 50% The following data are also available: The bond yield to maturity is 9% The tax rate is 35% Earners of preferred shares 8.5 SAR The price of the preferred share is 100 riyals The issuance fee for preference shares is 2 riyals common share earnings 1.2 The common share price is 30 riyals The growth rate per common share is 9% A- Calculate the weighted average cost of capital B- If the return earnings is (30) million riyals, how much the amount will be The marginal cost of the capital in riyals, and if it is the cost of issuing ordinary shares It is (1.5) riyals, so how much will the new common shares will cost?
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