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Reference is made to the 2 0 2 2 Balance Sheet of Tram - Ropes limited . Tram - Ropes Limited Balance Sheet 2 0

Reference is made to the 2022 Balance Sheet of Tram-Ropes limited.
Tram-Ropes Limited
Balance Sheet 2022
Cash
1,000,000.00 Accounts Payable
8,000,000.00
Acc.
Receivable
12,000,000.00 Notes Payable
8,500,000.00
Marketable
securities
3,000,000.00 Long-term Debt
20,000,000.00
Inventories
7,500,000.00 Common stock
7,500,000.00
Fixed Assets
26,500,000.00 Preferred Stock 6,000,000.00
Total Assets
50,000,000.00
Total
Liabilities and
Equity
50,000,000.00
Additional Information:
i. The Long-Term debt consists of 8% annual coupon bonds, with
15 years to maturity and are currently selling for 95% of
par.
ii. The companys common shares which have a book value of $20
per share are currently selling at $25 per share.
iii. Preferred shares have a book value of $100 per share. These
shares are currently selling at $120 per share and pays
dividends of 6% per annum on book value.
iv. The dividend growth rate is expected to be 3%, and dividend
for 2023 is projected to be $5.00 per share.
v. The Companys Tax rate is 30%.
Required:
Determine the following for Tram-Ropes Limited:
A. Total Market value of the firms capital structure
(3 marks)
B. After-tax Cost of Debt
(2 marks)
C. Cost of Common Stock
(2 marks)
D. Cost of Preferred Stock
(1 mark)
E. WACC (2 marks

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