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Calculate the weighted average cost of capital

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Question - Calculate the Weighted Average Cost of Capital (WACC) of Alborz Company using  the following information:

A. Alborz has 5,000,000 outstanding ordinary shares. Current price is $3 per share. The next dividend on Alborz share will be $0.55and these dividends are expected to grow at the rate of 10% p.a.

B. Alborz has 3,000,000 preference shares. Market price of preference share is $2 and the current dividend on Preference share is $0.45.

C. Alborz has 1,750 bonds that currently sell at their par value with 10 years to maturity coupon rate is 8% per year with face value of $1000. Tax rate is 30%.

Reference no: EM131644706

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