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I needed the answer on urgently basis...i shall be very thank full to you. Task 2: Sameer plc, a listed industrial Company, is considering a

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I needed the answer on urgently basis...i shall be very thank full to you.

Task 2: Sameer plc, a listed industrial Company, is considering a major investment. The Company needs an appropriate rate at which to discount the estimated after-tax cash flows for the investment. The Company's normal practice is to be based on the weighted average cost of capital (WACC). The Company's balance sheet shows 160 million Ordinary shares of OMR 0.50 each at OMR 80 million, the Preference shares of OMR 32 million and 8% Loan stock of OMR 45 million. The Ordinary shares have a market price of OMR 2.100 and an expected dividend of OMR 0.180 per share. Dividends have shown an average annual growth rate of 5% over recent years. The Company's Preference shares are selling at OMR 0.870 per share and carry a dividend of 7% per share. The Company currently has Loan stock with an 8 percent coupon rate and has a market value of OMR 100. The Loan stock is redeemable at par. The corporation tax rate is expected to be 30% for the foreseeable future. In regard to this topic, you are required to prepare a report./ a. Compute the cost of capital for individual components and calculate the company's WACC. b. Explain the workings and discuss the assumptions of cost of capital. C. Critically discuss the criticisms of using the figure calculated in (a) as the discount rate for assessing the investment under consideration by the Company. d. Recommendations and conclusions. Task 2: Sameer plc, a listed industrial Company, is considering a major investment. The Company needs an appropriate rate at which to discount the estimated after-tax cash flows for the investment. The Company's normal practice is to be based on the weighted average cost of capital (WACC). The Company's balance sheet shows 160 million Ordinary shares of OMR 0.50 each at OMR 80 million, the Preference shares of OMR 32 million and 8% Loan stock of OMR 45 million. The Ordinary shares have a market price of OMR 2.100 and an expected dividend of OMR 0.180 per share. Dividends have shown an average annual growth rate of 5% over recent years. The Company's Preference shares are selling at OMR 0.870 per share and carry a dividend of 7% per share. The Company currently has Loan stock with an 8 percent coupon rate and has a market value of OMR 100. The Loan stock is redeemable at par. The corporation tax rate is expected to be 30% for the foreseeable future. In regard to this topic, you are required to prepare a report./ a. Compute the cost of capital for individual components and calculate the company's WACC. b. Explain the workings and discuss the assumptions of cost of capital. C. Critically discuss the criticisms of using the figure calculated in (a) as the discount rate for assessing the investment under consideration by the Company. d. Recommendations and conclusions

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