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Capital and reserves Ordinary shares (25p nominal) Share premium Profit and loss account 3,000 de 4,200 3,800 11,000 * 9% irredeemable loan stock, current
Capital and reserves Ordinary shares (25p nominal) Share premium Profit and loss account 3,000 de 4,200 3,800 11,000 * 9% irredeemable loan stock, current market price is 112.5 ex interest. The debt may be assumed to be risk free. Mario Brothers Inc. ordinary share price is 2.50 ex dividend. The company's current dividend is 22.8p and the future growth rate for dividend is 6%. thuda a. Calculate the cost of capital for Mario Brothers Inc. after the tax reduction. WALC [15 marks] b. Why is financial leverage important for a firm? Discuss from Modigliani-Miller's perspective.
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a Calculation of the Cost of Capital for Mario Brothers Inc after tax reduction To calculate the cost of capital for Mario Brothers Inc we first need to determine the cost of equity and the cost of de...
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International Financial Reporting and Analysis
Authors: David Alexander, Anne Britton, Ann Jorissen
5th edition
978-1408032282, 1408032287, 978-1408075012
