Durr Ham plc currently has 80 million shares outstanding priced at £2 each. A dividend of 10p has just been paid and is expected to grow steadily by 5% per annum. The company has 1 million bonds outstanding, trading at £50 each, and with a yield to maturity of 9%. The company pays corporate tax at a rate of 22%. What is the firm’s weighted average cost of capital (WACC)? a. 9.5%
Durr Ham plc currently has 80 million shares outstanding priced at £2 each. A dividend of 10p has just been paid and is expected to grow steadily by 5% per annum. The company has 1 million bonds outstanding, trading at £50 each, and with a yield to maturity of 9%. The company pays corporate tax at a rate of 22%. What is the firm’s weighted average cost of capital (WACC)? a. 9.5%
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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Durr Ham plc currently has 80 million shares outstanding priced at £2 each. A dividend of 10p
has just been paid and is expected to grow steadily by 5% per annum. The company has 1
million bonds outstanding, trading at £50 each, and with a yield to maturity of 9%. The
company pays corporate tax at a rate of 22%.
What is the firm’s weighted average cost of capital (WACC)?
a. 9.5%
b. 4.7%
c. 9.0%
d. 10.0%
e. None of the above.
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