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You have been presented with following information from Kim Ltd. Source of Capital Book Value Market Value Long-term debts 9 360 000 Preference shares
You have been presented with following information from Kim Ltd. Source of Capital Book Value Market Value Long-term debts 9 360 000 Preference shares Ordinary shares Total 14 976 000 Required: 149 760 3 931 200 Fair Play Company has an average tax rate of 28% 224 640 11 232 000 a) Calculate the WACC based on the book value weights. (Present your answer in a tabular form as shown below) Weight Type of Capital Book Value Before-tax cost 9% 14% 18% Cost (%) Weighted cost (%) b) Compare the book value and market value method of calculating the WACC above.
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The calculation of the weighted cost of each type of capital is as follows Weighted cost of longterm ...
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Financial Accounting Tools for Business Decision Making
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
5th Edition
9781118560952, 1118560957, 978-0470239803
