Calculate WACC

Extract of Balance Sheet for Rio Tinto

Issued Capital ($ million) 28,030,000 Ordinary shares of $83.0 fully paid = $2326.49 million

6,800,000 3.1% Preference Shares of $81.0 fully paid = $550.80 million

Current Liabilities and Provisions Bank Overdraft $93.00million ,Trade Creditors 41.00 ,Unsecured Notes 59.00 , Non-Current Liabilities =>

Debentures $88.00 million

Term Loans $67.00 million

Mortgage $91.00million

The companys preference and ordinary shares are currently trading at $93.25 each. The risk-free rate of return is 1.15 % p.a., and the return on the market is 5.5 % p.a. Debentures have a coupon interest rate of 7.4% p.a. and could be re-issued at the present time at an interest rate of 6.8% p.a. The debentures will be redeemed at their face value in six years time. Face value is as per the balance sheet. The mortgage loan is repayable in four years time and the current interest rate is 6.45% p.a. The mortgage was initially negotiated at 7.30% p.a.