Question
The capital structure of a company consists of the following: 35% debt, 15% preference shares, 50% ordinary shares. The company's ordinary share is sold in
The capital structure of a company consists of the following: 35% debt, 15% preference shares, 50% ordinary shares. The company's ordinary share is sold in the market at a price of 50 OMR, and the company plans to pay 4 OMR as a dividend per share in the next year, and these dividends are expected to grow at a constant rate of 6% annually for an unlimited period. The company is subject to a 40% tax rate. The preferential share price of the company is 100 OMR, and the company pays 10 OMR as a dividend for each preference share. The company's debt carries a nominal interest rate of 15%. Requirement: Calculate the cost of each source of financing for the company and the weighted average cost of the company's capital
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