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i want the answers today QUESTION The summarized balance sheet of D plc at 30 June 20X9 was as follows: The current price of the
i want the answers today
QUESTION The summarized balance sheet of D plc at 30 June 20X9 was as follows: The current price of the ordinary shares is 135n ex dividend. The dividend of 10n is payable in the next few days. The expected rate of growth of the dividend is 9% per annum. The current price of the preference shares is 77n and the dividend has recently been paid. The debenture interest has also been paid recently and the debentures are currently trading at K80 per K100 nominal. Assume that D plc issued the debentures one year ago to finance a new investment. Ignore corporation tax. (a) Calculate the gearing ratio for D plc using market values (5 Marks) (b) Calculate the cost of ordinary share capital, the cost of preference share capital, and the cost of debentures. (3 Marks) (c) If the capital asset pricing model (CAPM) were to be used to calculate the cost of ordinary share capital for D plc, state the three (3) pieces of data needed. (3 Marks) (d) Calculate the company's weighted average cost of capital (WACC) using respective market values as weighting factors. (5 Marks) (e) Give any four (4) reasons why D plc may have issued debentures rather than preference shares to raise the required finance. (4 Marks)Step by Step Solution
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