Calculate Weighted Average cost of capital: 6 million $1 ordinary shares, currently trading at $4 per share.4 million 12% $2 preference shares, currently trading at $3 per share.$2 million, 14% debentures, with a current yield – to – maturity of 11%, due in 6 years.Bank loan: $1 600 000 at 16% interest rate per annum, maturing in 7 years.Additional information:The company has a beta factor of 1.5 and a risk free rate of 6%.Its tax rate is 30% and the return on market is 15%.The current dividend paid on the ordinary shares is 80 cents per share and a growth rate of 13% ismaintained.

Calculate Weighted Average cost of capital: 6 million $1 ordinary shares, currently trading at $4 per share.4 million 12% $2 preference shares, currently trading at $3 per share.$2 million, 14% debentures, with a current yield – to – maturity of 11%, due in 6 years.Bank loan: $1 600 000 at 16% interest rate per annum, maturing in 7 years.Additional information:The company has a beta factor of 1.5 and a risk free rate of 6%.Its tax rate is 30% and the return on market is 15%.The current dividend paid on the ordinary shares is 80 cents per share and a growth rate of 13% ismaintained.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter26: Mergers And Corporate Control

Section: Chapter Questions

Problem 1P: Hasting Corporation is interested in acquiring Vandell Corporation. Vandell has 1 million shares...

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Please answer this MCQ
Compute the weighted average cost of capital given the information below. Book Value of Debt $2,500,000,000 Market Value of Debt $2,750,000,000 Book Value of Equity $3,250,000,000 Market Value of Equity $4,000,000,000 Dividend Milberg has just paid $3.25 Current stock price $40.50 Growth rate of dividends 6% Bond information Coupon rate = 4%, maturity = 20 years, maturity value =$1,000 and the current price is $985.25. Assume interest is paid semiannually. Flotation cost of equity 4% Flotation cost of debt 2% Questions 2 through 8 use the following information. Milberg Golf has decided to sell a new line of golf club. The clubs will sell for $1,100 per set and have a variable cost of 80% of revenues per set. The company has spent $450,000 for a marketing study that determined the company will sell 80,000 sets per year for seven years. The company also plans to offer a line of golf balls, which are expected to…