Calculate the weighted average cost of capital for alpha plc

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Weighted Average Cost of Capital

Use the information below to calculate the weighted average cost of capital (WACC) for Bravo plc.

£m

Ordinary shares of £1 each (13 million)                     13

8% irredeemable debentures                                     22

The current share price is 320p and the market value of debentures is £85 (per £100 nominal).

A dividend of 16 pence per share has just been paid. The expected growth rate of dividends is 8%.

Corporation tax rate is 20%.

 

a) Calculate the weighted average cost of capital (WACC) for Alpha plc.

Reference no: EM131565961

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