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Magenta GmbH is a German company based near Frankfurt and manufactures and exports various types of sausages to many markets throughout Europe. Assume that it

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Magenta GmbH is a German company based near Frankfurt and manufactures and exports various types of sausages to many markets throughout Europe. Assume that it is 1 January 2023. The company is financed as follows: The ordinary shares are currently trading on the Frandfurt market at 63.25 per share. The maket value of the 4% bond is 104 per E100 bond and each bond is redeemable at a 5% premium. The risk free rate of return is 2% and the market premum for risk is 5%. Magenta GmbH has an equity beta of 1.1. Magenta GmbH pays corporate taxation at a rale of 20%. Required: Using market values where appropriate, calculate the following 1. The cost of equity (2 marks) 2. The cost of the 4% bond (3 marks) 3. The cost of the bank loan (1 mark) 4. The weighted awarage cost of capcal (4 marks)

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