Calculate sivuyiles weighted average cost of capital

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Sivuyile Construction is financed by R100 million long-term debt, R20 million preferred shares and 5 million issued ordinary shares. The firm can raise debt by selling R1000 par value, 10% coupon rate (paid semi-annually), 10 year bonds at a discount of R50 and has to pay R20 in floatation cost. It can also sell 9% preferred shares with a par value of R100 at a discount of 10% on par value and has to pay R7 per share in floatation cost. Sivuyile's ordinary shares have a beta of 1.5, trades at R30 each, and a dividend of R5 per share has just been paid. The risk free rate is currently 8% while the total market return for the past amounts to 15%. The company's tax rate is 30%.

Calculate Sivuyile's weighted average cost of capital (WACC)

Reference no: EM131801899

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