Corpcon (Pty) Ltd wishes to expand and modernise its facilities. The installed cost of a proposed computer-controlled automatic-feed roaster will be R130 000. The new roaster will be depreciated over a 5-year straight line period The company has a chance to sell its 4-year-old roaster for R35 000. The existing roaster originally cost R60 000 and was being depreciated over a 6-year straight-line period. Sales revenue from expansion will amount to R 70 000 per year and operating expenses and other costs (including depreciation) will amount to 29% of sales. Additional information Issued shares: 10 000 000 ordinary shares Debt: R200 million Before tax borrowing cost: 12% Share price: R24.00 Latest dividends: R2.40 Expected growth rate: 5% Tax rate: 29% Calculate the weighted average cost of capital (WACC.)
Corpcon (Pty) Ltd wishes to expand and modernise its facilities. The installed cost of a proposed computer-controlled automatic-feed roaster will be R130 000. The new roaster will be
Additional information
Issued shares: 10 000 000 ordinary shares
Debt: R200 million
Before tax borrowing cost: 12%
Share price: R24.00
Latest dividends: R2.40
Expected growth rate: 5%
Tax rate: 29%
Calculate the weighted average cost of capital (WACC.)
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