The capital structure of a company during the whole of this current financial year has been as
Question:
The capital structure of a company during the whole of this current financial year has been as follows: Ordinary Shares $1 fully paid - market value $800,000 6% debentures ($100 par value) $212,000 8% Unsecured Notes ($100 par value) $306,000 Last year's dividends for the company was 8 cents and this rate is expected to grow at a rate of 5% p.a. The market value of the company's ordinary shares is $2 per share. The market value of the debentures is $106; redeemable at par in 5 years. The market value of the notes is $102; redeemable at par in 3 years. The company tax rate is 30%. The weighted average cost of capital for the company is?
Fundamental Accounting
ISBN: 9781485112112
7th Edition
Authors: David Flynn, Carolina Koornhof, Ronald Arendse, Anna C. E. Coetzee, Edwardo Muriro, Louise Christel Posthumus, Louise Mancy Smit