Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Information concerning the capital structure of Praxit Finance Company is as follows: - The current risk-free rate is 7,25%, while the current market portfolio return
Information concerning the capital structure of Praxit Finance Company is as follows: - The current risk-free rate is 7,25%, while the current market portfolio return is 12,2%. The company's beta is 1 . - The preference share capital was issued at R5 per share. An annual 10% dividend is paid at the end of each year. The shares are currently trading at R5,50 per share. - Debentures due in 7 years with a before tax cost of 10% - The company tax rate is 28%. REQUIRED: Calculate the cost of: 1.1 Ordinary shares 1.2 Preference shares (3) 1.3 Debt 1.4 Using the table below and the given market values of every form of capital, calculate the weighted average cost of capital (WACC) using your answers from above. \begin{tabular}{|l|l|l|l|l|} \hline Capital source & Market Value & Weighting & Cost & Weighted Cost \\ \hline Ordinary Shares & & & & \\ \hline Preference Shares & & & & \\ \hline Debt & & & & \\ \hline Total & & & & \\ \hline \end{tabular}
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started