Weighted Average Cost of Capital (WACC
Suppose Your Company where you work as Finance Director is Financed by both debt (bonds) and equity (shares). In the Board Meeting, it was agreed that you needed to raise extra funds for capital Expenditure ($1 Million). Since your company is listed on the Lusaka Stock Exchange, you sold 400 worth of bonds at $1,000 each at 5% coupon rate (A total of $400,000 raised). The company further issued stocks (shares) totaling 6,000 at $100 each with an expected return of 6% (
Assume Corporate Tax Rate is 35%
REQUIRED:
Calculate the Weighted Average Cost of Capital (WACC) for your company
Step by step
Solved in 2 steps with 2 images
