Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Working out not needed Information available includes the following: Preference Shares: The preference shares were issued for $20 with a 11% dividend. The current market
Working out not needed
Information available includes the following: Preference Shares: The preference shares were issued for $20 with a 11% dividend. The current market price is $18. When they were initially issued, they issued $100m worth of shares. Debt: - The debt that the firm has issued was issued 20 years ago and has 7 years left to maturity. The bonds pay a semi-annual coupon of 6% pa. The bonds were issued for $1000 each and are currently valued at $1000 each. 20 years ago $200,000,000 worth of debt was issued Ordinary Shares: The company has 150 million ordinary shares on issue with a market price of $1.75 each. - The Beta of these shares is 1.3, the market risk premium is 9% and the risk free rate is 5%. - These shares last paid a dividend of 30 cents with expected growth of 4%. Other Information: - The tax rate is 30%. Calculate the following: Determine the weight of debt, ordinary equity and preference equity to be used in the calculation of the after tax WACC. (3 Marks) Please answer as a decimal to 4 decimal places. Answers: Weight Debt Answer. Weight Ordinary Weight Preference Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started