WACC., Finance Basics

The following is the existing capital structure of Company XYZ Ltd.
Ordinary shares at Shs.10 par 1,000,000
Retained 800,000
12% preference shares Shs.10 par 400,000
16% loan Shs.100 par 300,000
Total capital employed Shs. 2,500,000
The company’s ordinary shares have a dividend cover of 3 times and pays a dividend of 10% on its ordinary share capital.
Ordinary shares sells at Shs.18
Preference shares sell at Shs.15
Debentures are selling at par. The tax rate is 30%
Compute:
a)Growth in Equity. (7 marks)
b)W.A.C.C. (8 marks)
Posted Date: 3/3/2013 7:40:14 AM | Location : Kenya







Related Discussions:- WACC., Assignment Help, Ask Question on WACC., Get Answer, Expert's Help, WACC. Discussions

Write discussion on WACC.
Your posts are moderated
Related Questions
Shareholders and Creditors Shareholders And Creditors or bond or debenture holders Bondholders are lenders or providers of long term debt capital.  Usually they will provi

Disadvantage of Joint Stock Companies Difficult to reconstruct the capital Many formalities in forming the company Heavy initial capital outlay. Loss of secrec

Explain the term - Underwriting Underwriting is an agreement whereby underwriter promises to subscribe to a specified number of debentures or shares or a specified amount of

what are financial markets. why do they exist

Example of Payback Period Method Suppose a project costs Sh.80,000 and will produce the following cash inflows as:                                  Cash inflows      Accumu

Explain about the monetary role of banks. The Monetary Role of Banks: • A bank is a financial intermediary. • Bank reserves are the currency banks hold within their va

Constant amount per share or fixed D.P.S. 1. The DPS is fixed in total amount of irrespective of the earnings level. These generate certainty and are consequently preferred vi

Timing of Investment a Stock Exchange The ideal way of creation profits on the stock exchange is to buy on the bottom of the market or lowest M.P.S and sell at the top of the

Conditions under which Loans Are Ideal a) Whenever the company's gearing level is low as the level of outstanding loans is low. b) The company's future cash flows as inflows