Mondi plc is a multinational packaging and paper company with a dual listing on the JSE and LSE. The business is also a constituent of the FTSE 100 Index. The business has a capital structure of 12 000 000 R1 ordinary shares, market price R1,75. Its preference shares are 2 000 000 15% R1,50 preference shares, market price R3. Reserves R4 500 000. It has received a bank loan from FNB Bank of R15 000 000 12,5%. Debentures 6 000 000 at par value 10,5% market price R115 (issued at R100). In order to equalise the tax effect, the debenture and bank loan interest weighting is reduced by multiplying it by 1 minus given corporate tax rate (27%). The current and expected future rate of ordinary share dividends is 10%. a) Calculate the overall market value (4) b) Calculate the overall cost (7) c) Calculate the WACC (9) 4:49 pm
Mondi plc is a multinational packaging and paper company with a dual listing on the JSE and LSE. The business is also a constituent of the FTSE 100 Index. The business has a capital structure of 12 000 000 R1 ordinary shares, market price R1,75. Its preference shares are 2 000 000 15% R1,50 preference shares, market price R3. Reserves R4 500 000. It has received a bank loan from FNB Bank of R15 000 000 12,5%. Debentures 6 000 000 at par value 10,5% market price R115 (issued at R100). In order to equalise the tax effect, the debenture and bank loan interest weighting is reduced by multiplying it by 1 minus given corporate tax rate (27%). The current and expected future rate of ordinary share dividends is 10%. a) Calculate the overall market value (4) b) Calculate the overall cost (7) c) Calculate the WACC (9) 4:49 pm
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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Transcribed Image Text:Mondi plc is a multinational packaging and
paper company with a dual listing on the JSE
and LSE. The business is also a constituent of
the FTSE 100 Index. The business has a capital
structure of 12 000 000 R1 ordinary shares,
market price R1,75. Its preference shares are 2 000
000 15% R1,50 preference shares, market price
R3. Reserves R4 500 000. It has received a bank loan
from FNB Bank of R15 000 000 12,5%. Debentures 6
000 000 at par value 10,5% market price R115 (issued
at R100).
In order to equalise the tax effect, the debenture and
bank loan interest weighting is reduced by multiplying
it by 1 minus given corporate tax rate (27%).
The current and expected future rate of ordinary share
dividends is 10%.
a) Calculate the overall market value (4)
b) Calculate the overall cost (7)
c) Calculate the WACC (9)
4:49 pm
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