Question 3 On January 1, the total market value of the Tysseland Company was R60 million. Duning the year, the company plans to raise and invest R30 million in new projects. The companys present market value capital structure, shown here, is considered to be optimal There is no short-term debt. [15 marks] TUAN OVER] 3 MBA5903 MAYIJUNE 2017 Debt Common equity Total capital R 30 000 000 30 000 000 R 60 000 000 New bonds will have an 8% coupon rate, and they will be sold at par. Common stock is currently selling at R30 a share. The stockholders' required rate of return is estimated to be 12%, consisting of dividend yield of 4% and an expected constant growth rate of 8%. (The next expected dividend is R1 .20, so the dividend yield is R120/R30 496). The marginal tax rate is 40%. 3.1 In order to maintain the present capital structure, how much of the new investment must be financed by common equity? Assuming there is sufficient cash flow for Tysseland to maintain its target capital structure without issuing additional shares of equity, what is its WACC? 3.2. 3.3. Suppose now that there is not enough intemal cash fow and the company must issue new shares of stock. Qualitatively speaking, what will happen to the WACC? No numbers are required to answer this