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With steps please DCU Danton plc has 10 million ordinary shares in issue with a current market value of 2,00 per share. The expected. dividend
With steps please DCU Danton plc has 10 million ordinary shares in issue with a current market value of 2,00 per share. The expected. dividend for next year is 0.16 per share and this is expected to grow each year at a constant rate of4per 47 cent. The business has 20 million of irredeemable loan capital in issue with a nominal Tate of imterest of 10 per 10/. 9 cent and which is quoted at 80 per 100 nominal value. Assume a rate of corporation tax of 20 per cent and that the current capital structure reflects the target capital structure of the company. Required: a)What is the weighted average cost of capital of the company? b)Explain what is meant by the term cost of capital'. Why is it important for a company to calculate its cost of capital correctly
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