NY plc, which pays corporation tax at 33%, has the following capital structure: Ordinary shares: 1,000,000 ordinary shares of nominal value 25p per share. The market value of the shares is 49p per share. A dividend of 7p per share has just been paid, and dividends are expected to grow by 8% per year for the foreseeable future. Preference shares: 250,000 preference shares of nominal value 50p per share. The market value of the shares is 32p per share and the annual net dividend of 7.5% has just been paid. Debentures: GHC100,000 of irredeemable debentures with a market price of GHC92 per GHC100 block. These debentures have a coupon rate of 10% and the annual interest payment has just been made. Calculate the weighted average after-tax cost of capital of BNY plc.
BNY plc, which pays corporation tax at 33%, has the following capital structure:
Ordinary shares: 1,000,000 ordinary shares of nominal value 25p per share. The market value of the shares is 49p per share. A dividend of 7p per share has just been paid, and dividends are expected to grow by 8% per year for the foreseeable future.
Debentures: GHC100,000 of irredeemable debentures with a market price of GHC92 per GHC100 block. These debentures have a coupon rate of 10% and the annual interest payment has just been made.
Calculate the weighted average after-tax cost of capital of BNY plc.
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