Question
QUESTION 1 Assume that Bank Windhoek, which is listed on the Namibian Stock Exchange, has a market value of debt of N$38 000, a cost
QUESTION 1 Assume that Bank Windhoek, which is listed on the Namibian Stock Exchange, has a market value of debt of N$38 000, a cost of equity of 26%, a tax rate of 37%, a market value of equity of N$27 000, a total value of financing of N$65 000, and a cost of debt of 39%. a) Calculate the WACC for Bank Windhoek using the information provided above. (5 Marks) b) Using Bank Windhoek's 2015-2019 audited financial statements. Calculate the weighted average cost of capital for Bank Windhoek for the period 2015-2019? What capital structure recommendations would you make to Bank Windhoek management based on the five-year WACC trend? (15 Marks)
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