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

Capital rationing, reasons for capital rationing in public sector

reasons for capital rationing in public sector

INTRODUCTION TO FINANCIAL MARKETS, DIFFERENTIATE BETWEEN ALLOCATIVE EFFICIE...

DIFFERENTIATE BETWEEN ALLOCATIVE EFFICIENCY AND PRICING EFFICIENCY

Calculating project OCF, Nipissing, Inc,, is considering a new three year e...

Nipissing, Inc,, is considering a new three year expansion project that requires an initial fixed asset investment of $2.4 million. The fixed asset falls in CCA Class 8 with a a 20

Determine the stock price, GeKay Inc. currently (January 1) has a net incom...

GeKay Inc. currently (January 1) has a net income of $10,000,000 which is expected to grow indefinitely(perpetuity) at 10% per annum.   The firm is financed at a debt-to -value ra

#dividend policy, #the managing directors of three profitable listed compan...

#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. c

Lrr, how do you calculate it

how do you calculate it

Financial Ratios, I do not understand how ratios are calculated on MSN Mone...

I do not understand how ratios are calculated on MSN Money website. My homework assignment was to look up GM''s income statement and balance sheet for the last quarter and compare

What is the beta of the portfolio, Question: There are two stocks, stoc...

Question: There are two stocks, stock A and stock B. The price of stock A today is $70. The price of stock A next year will be $50 if the economy is in recession, $80 if the ec

Find the total value - debt and assets ratio, Kodak Corporation has debt/as...

Kodak Corporation has debt/assets ratio of .3, its cost of debt is 9% and that of equity 13%. The tax rate of Kodak is 30%. The company is not growing, has a dividend payout ratio

Assignment 2, created the firm''s pro forma balance sheet for the next fisc...

created the firm''s pro forma balance sheet for the next fiscal year?

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