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Eseyl Industries Ltd uses a combination of shares and debt in their capital structure. Details of their capital structure are provided below: There are 1
Eseyl Industries Ltd uses a combination of shares and debt in their capital structure. Details of their capital structure are provided below: There are R ordinary shares in issue and the current market price is R per share. The latest dividend paid was R and a average growth for the past six years was maintained. The company has R preference shares with a market price of R per share. The company has a public traded debt with a face value of R The coupon rate of the debenture is and the yield to maturity of The debenture has years to maturity. The company also has a bank overdraft of R due in years time and interest is charged at per annum. Additional information: The company has a beta of a riskfree rate of and a return on the market of Company tax rate is Required: Calculate the weighted average cost of capital, using the Gordon Growth Model to calculate the cost of ordinary shares.
Eseyl Industries Ltd uses a combination of shares and debt in their capital structure. Details of their
capital structure are provided below:
There are R ordinary shares in issue and the current market price is R per share.
The latest dividend paid was R and a average growth for the past six years was
maintained.
The company has R preference shares with a market price of R per share.
The company has a public traded debt with a face value of R The coupon rate of the
debenture is and the yield to maturity of The debenture has years to maturity.
The company also has a bank overdraft of R due in years time and interest is
charged at per annum.
Additional information:
The company has a beta of a riskfree rate of and a return on the market of
Company tax rate is
Required:
Calculate the weighted average cost of capital, using the Gordon Growth Model to calculate
the cost of ordinary shares.
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