Question 4 You are given the following information about Jordan plc: Non-current assets Current assets Total assets Equity finance Financial position statement at January 2017 000 000 1,511 672 2,183 200 150 Ordinary shares (50p) Reserves Non-current liabilities 7% preference shares 9% bonds (redeemable after 8 years) 9% bank notes Current liabilities Total liabilities You are also given the following information: . Yield on Treasury bills . Jordan plc equity beta Equity risk premium . Current ex-div ordinary share price . Current ex-div preference share price Current ex-interest bond price 105 . Corporate tax rate 30% Required: (a), calculate the company's weighted average cost of capital (WACC) using market weightings. (12 marks) (b). critically discuss whether you consider that companies, by integrating a sensible level of gearing into their capital structure, can minimise their weighted average cost of capital. (13 marks) 300 650 560 7% 1.21 9.1% 2.35 66p 323 2183