b. The company's CEO has approached you about Haparapara's capital structure. He wants to know why the companies does not use more preference-share financing, since it cont less than debt. What would you tell the CEO? LO12.3 Finding the WACC. Deception Mining Corporation has 67 million ordinary shares 68% preference shares outstanding and 2SO OO, 8.2% half yearly bonds outstanding, par value S1000 each. The ordinary shares currently sell for $57 and have a beta of 1.13, the $1 13; and the bond have 20 years to maturity and sell for 109% of par. The market risk premium is 78%; government bonds yielding 5.3%; and the deception Mining's tax rate is 30% The book value of one preference share is $100 16 270 00. a. what is the firm's market-value capital structure? b. If Deception Mining is evaluating a new investment poject that has the same risk as the firm typical project, what rate should the firm use to discount the project cash flow under a classical tax system? 18. Calculating the WACC. You are given the following information Debt: 15 000 7.3% coupon bonds outstanding, at S1 000 face value, with 20 years to maturity and a quote price of $103. These bonds pay interest half-yearly Ordinary Shares: 325 000 ordinary shares selling for 52.80 per share, The share has a beta of 0.93 and will pay a dividend of $2.53 next year. The dividend is expected to grow by 4%per year indefinitely, Preference shares: 9 000, 5.9% preference shares selling at $95 per share Market: 13% expected return, a risk free rate of 4.5% and a 30% tax rate. Calculate the WACC for Cocky Enterprise under classical tax system. LO 12.3