Cost of Capital

Berap plc is financed by 7m $1 Ordinary Shares and $8m 8% Redeemable Debentures. Market Values are $1.20 Ex Dividend and 90% Ex Interest.

Apart from above Company has a Bank Loan of $2m at 8% and $1 Preference Shares of $1m with 12 p per share agreed dividend.

Company also has 3m Irredeemable Debentures at 12%.

An Ordinary Dividend of 10p has just been paid and future ordinary dividends expect to grow by 5%. Debentures are Redeemable in 5 Years time.

Requirement

i) Calculate the Capital Structure of the Company

ii) Calculate the WACC of the Company