Question No. 2

Continuing illustration 19, it the firm has 18,000 equity shares of $100 each outstanding and the current market price is $300 per share. The cost of issuing shares is 12%. The market values and book values of the debt is $1500000 with the cost of debt 5% and preference capital is $1200000 with cost of acquiring 10%.

1. What is the total capital of this company with proportions of each capital component in total capital structure (percentage)?

2. Calculate the market value weighted average cost of capital (WACC).