CalculatetheaftertaxWACCforNorthSouthLimited.

You are given the following information concerning NorthSouth Limited:

Debt 40,000 bonds with a 6.0 percent coupon rate, ten years to

maturity, face value of $1000 and a quoted price of

$850.71.The cost of debt before tax is 8.25%.

Ordinary Shares400,000 fully paid ordinary shares.The dividends have an

expected constant growth rate of 8 percent forever; the

current price is $40.00; and the dividend next year will be

$3.00. The beta is 1.5.

Preference shares30,000 preference shares paying a dividend of $1.10 every

year in perpetuity with a current price of $25.00.

Market The corporate tax rate is 30 percent; the expected return of

the market is 12.0 percent; and the riskfree rate is 5.00

percent.