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Following is the information about the capital structure of TEENESS Company: Shares O/S Book value Market value Cost of Component (%) Common stock 1,000,000 20,000,000

Following is the information about the capital structure of TEENESS Company:

Shares O/S

Book value

Market value

Cost of Component (%)

Common stock

1,000,000

20,000,000

25,000,000

-

Preferred stock

100,000

2,500,000

2,500,000

12.00

Bonds

-

12,000,000

12,500,000

9.00

Loans

-

8,000,000

8,000,000

11.00

Total capitalization

45,500,000

48,000,000

-

Additional data available is as follows:

Tax rate 35%

Last years dividend per share Rs. 1.75

Growth-rate dividend 5.00%

Par value per share Rs. 20

Market value per share Rs. 25

Required:

By using the information provided above, find out the missing figures in the given table:

Cost of components (%)

Weightage of individual componentsBV

Weightage of individual componentsMV

WACC BV (%)

WACC MV (%)

Common stock

?

0.47

0.52

?

?

Preferred stock

12.00

0.06

?

0.72

0.60

Bonds

9.00

?

0.26

?

?

Loans

11.00

1.19

?

1.36

1.22

Overall WACC (Weighted Average Cost of Capital)

?

?

(BV = Book Value; MV = Market Value)

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