assinment, Corporate Finance

Assignment Help:
Profit for the year R3 million R4 million
Gross dividends R1.5 million R2 million
Market value per ordinary share R4 R1.60
Number of ordinary shares 5 million 10 million
Gross interest yield on loan capital (YTM) 8% 12%
Market value of loan R10 million R16 million

The annual growth rate in dividends is 5% for Tswinga Ltd and 8% for Muledane Ltd. Corporate tax rate is 28%.

Required:
a) Calculate the market value weighted average cost of capital (WACC) of Tswinga Ltd and of Muledane Ltd. (22 marks)
b) Discuss two possible reasons why the cost of ordinary share capital differs between the two businesses. (4 marks)

Related Discussions:- assinment

Efficiency, differentiate between pricing efficiency and allocative efficie...

differentiate between pricing efficiency and allocative efficiency

Capital Expenditure Decisions and Investment Criteria, Question 1: Capital ...

Question 1: Capital Expenditure Decisions and Investment Criteria (30 MARKS) In recent years Morten Ltd, a company that manufactures and markets a range of p

Dividend policy, the managing directors of three profitable listed companie...

the managing directors of three profitable listed companies discussed their company''s dividend policies. company A has deliberately paid no dividends for the past five years. comp

Business finance task, Your company is considering using the payback period...

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique. Your company is considering the constructio

Replacement decision, #question.Baobab rolling mills owns a lathe machine w...

#question.Baobab rolling mills owns a lathe machine which was purchased 10years ago at sh. 75 million. The machine had an expected life of 15 yrs at the time it was purchased, and

Review the existing legislation regulating banks entities, The Minister of ...

The Minister of Finance decides to review the existing legislation regulating banks and non-banking entities. You have been appointed as Advisor to the Minister to work on the pro

Differences between fundamental analysis, Question: (a) Distinguish b...

Question: (a) Distinguish between open-ended funds and closed-ended funds. (b) Briefly explain the differences between fundamental analysis and technical analysis. (c)

Mergers & acquisitions , Mergers & Acquisitions now is playing crucial role...

Mergers & Acquisitions now is playing crucial role in modern corporate finance world. For any prospects, there is only one reason for a firm making an offer to M&A another firm,

Merger and aquisition, It is given that company A will acquire company B wi...

It is given that company A will acquire company B with shares of common stock. Present earnings of A is rs. 20 million and of company B is rs. 5 million. Earning price per share of

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd