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Weintraub Electronics wants to expand to a new market segment with their ActiveWear wireless earphones. The cost of the R5 million they raised in RE
Weintraub Electronics wants to expand to a new market segment with their ActiveWear wireless earphones. The cost of the R5 million they raised in RE and Shares capital is respectively 13% and 10% per year. Their (RE:shares) ratio for this project is 1.5 while the debt-equity ratio for this project is 0.4, (which can also be interpreted as debt:equity of 3:1). Half of their debt financing is from a loan at an interest rate of 11% per year while the rest is from a bond at a rate of 14% per year. Note: Preliminary workings before completing (a. b. &c.] [12 marks] a. What is the WACCEquity for this project? [6 marks] b. What is the WACCDebt for this project? [6 marks] c. What is the WACC Total for this project? [6 marks]
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