The Capital Structure of GM Ltd is as follows: Kshs. Million Ordinary Shares 50 Preference Shares 50 Debt 10 Bank Overdraft 10 Retained Earnings 80 Total Capital 200 Additional Information (a) The GM Ordinary Shares are currently trading in the Nairobi Security Exchange at Kshs.30 per share and pays dividend on semiannually basis at Kshs.0.30 per share. This dividend is expected to increase by 5% per year. (b) The SPV 8% Preference Shares are currently trading at Kshs.48 per share with a Par Value of Kshs.50 (c) The Debt in the Menu of Finance (Capital Structure) is charged interest of Kshs. 1 million per annum. (d) The Bank Overdraft is charged interest of Kshs. 1 million per annum. (e) The Cost of Retained Earnings is the same as that of Ordinary Shares. REQUIRED Compute the WACOC
The Capital Structure of GM Ltd is as follows: Kshs. Million Ordinary Shares 50 Preference Shares 50 Debt 10 Bank Overdraft 10 Retained Earnings 80 Total Capital 200 Additional Information (a) The GM Ordinary Shares are currently trading in the Nairobi Security Exchange at Kshs.30 per share and pays dividend on semiannually basis at Kshs.0.30 per share. This dividend is expected to increase by 5% per year. (b) The SPV 8% Preference Shares are currently trading at Kshs.48 per share with a Par Value of Kshs.50 (c) The Debt in the Menu of Finance (Capital Structure) is charged interest of Kshs. 1 million per annum. (d) The Bank Overdraft is charged interest of Kshs. 1 million per annum. (e) The Cost of Retained Earnings is the same as that of Ordinary Shares. REQUIRED Compute the WACOC
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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The Capital Structure of GM Ltd is as follows:
Kshs. Million
Ordinary Shares 50
Preference Shares 50
Debt 10
Bank Overdraft 10
Retained Earnings 80
Total Capital 200
Additional Information
(a) The GM Ordinary Shares are currently trading in the Nairobi Security Exchange at Kshs.30 per share and pays dividend on semiannually basis at Kshs.0.30 per share. This dividend is expected to increase by 5% per year.
(b) The SPV 8% Preference Shares are currently trading at Kshs.48 per share with a Par Value of Kshs.50
(c) The Debt in the Menu of Finance (Capital Structure) is charged interest of Kshs. 1 million per annum.
(d) The Bank Overdraft is charged interest of Kshs. 1 million per annum.
(e) The Cost of Retained Earnings is the same as that of Ordinary Shares.
REQUIRED
Compute the WACOC
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