An entity has the following information in its statement of financial position. Ordinary shares of 50c $2 500 000 12% unsecured bonds $1 000 000 The ordinary shares are currently quoted at 130c each and the bonds are trading at $72 per $100 nominal.The ordinary dividend of 15c has just been paid with an expected growth rate of 10%. Corporation tax is currently 30%. Calculate the weighted average cost of capital for this entity
An entity has the following information in its statement of financial position. Ordinary shares of 50c $2 500 000 12% unsecured bonds $1 000 000 The ordinary shares are currently quoted at 130c each and the bonds are trading at $72 per $100 nominal.The ordinary dividend of 15c has just been paid with an expected growth rate of 10%. Corporation tax is currently 30%. Calculate the weighted average cost of capital for this entity
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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An entity has the following information in its
Ordinary shares of 50c $2 500 000
12% unsecured bonds $1 000 000
The ordinary shares are currently quoted at 130c each and the bonds are trading at $72 per $100 nominal.The ordinary dividend of 15c has just been paid with an expected growth rate of 10%. Corporation tax is currently 30%.
Calculate the weighted average cost of capital for this entity
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