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Toys R us ( Pty ) Ltd is an international company with headquarters in Parsippany - Troy Hills, New Jersey, in the New York metropolitan

Toys R us (Pty) Ltd is an international company with headquarters in Parsippany-Troy Hills, New Jersey, in the New York metropolitan area. Its an American toy, clothing, and baby product retailer owned by Tru Kids (doing business as Tru Kids Brands) and various others. The business has expanded into third world countries starting with a branch in Cape Town, South Africa. The business has a capital structure of 100000000 R1 ordinary shares, market price R1,50. Their preference shares are 8000000010% R1 preference shares, market price R2. They have a received a bank loan from HSBC Bank of R50000000010%. Debentures 25000000 at par value 10,5% market price R110(issued at R100).
In order to equalise the tax effect, the debenture and bank loan interest weighting is reduced by multiplying it by 1 minus the given corporate tax rate (27%).
The current and expected future rate of ordinary share dividends is 10%.
REQUIRED:
a) Calculate the overall market value showing the proportional breakdown(5)
b) Calculate overall cost using the Dividend Discount Method (5)
c) Calculate the Weighted Average Cost of Capital (WACC)(5)

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