Hi there can you please assist on the following below You have just graduated and landed a job as a junior analyst in the Equities Division of Waya WayaBank Ltd. Your manager has presented you with the following information. Company A Company B Share price R 50 R 40 No. of ordinary shares in issue 10 Million 12 Million Annual Earining per share R 50 Million R 50 Million Earnings per share R 5.00 R 4.17 Dividend payout ratio 30% ? dividend yield ?
Cost of Capital
Shareholders and investors who invest into the capital of the firm desire to have a suitable return on their investment funding. The cost of capital reflects what shareholders expect. It is a discount rate for converting expected cash flow into present cash flow.
Capital Structure
Capital structure is the combination of debt and equity employed by an organization in order to take care of its operations. It is an important concept in corporate finance and is expressed in the form of a debt-equity ratio.
Weighted Average Cost of Capital
The Weighted Average Cost of Capital is a tool used for calculating the cost of capital for a firm wherein proportional weightage is assigned to each category of capital. It can also be defined as the average amount that a firm needs to pay its stakeholders and for its security to finance the assets. The most commonly used sources of capital include common stocks, bonds, long-term debts, etc. The increase in weighted average cost of capital is an indicator of a decrease in the valuation of a firm and an increase in its risk.
Hi there can you please assist on the following below
You have just graduated and landed a job as a junior analyst in the Equities Division of Waya WayaBank Ltd. Your manager has presented you with the following information.
| Company A | Company B | |
| Share price | R 50 | R 40 |
| No. of ordinary shares in issue | 10 Million | 12 Million |
| Annual Earining per share | R 50 Million | R 50 Million |
| Earnings per share | R 5.00 | R 4.17 |
| Dividend payout ratio | 30% | ? |
| dividend yield | ? | |
| 5% | ||
Q.1.1. Calculate the price earnings ratio for both companies
Q1.2. Assiming that company a has dividend payout ratio of 30%; calculate the dividend per share for company A
Q.1.3. Calculate the dividend yield for company A
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