WACC., Finance Basics

Assignment Help:
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)

Related Discussions:- WACC.

Trial and error method, Trial and Error Method a) Select any rate of i...

Trial and Error Method a) Select any rate of interest on random and employ it to compute NPV of cash inflows. b) If rate selected produces NPV lower than the cost, want a l

Inventory management - supply chain management, Inventory Management - Supp...

Inventory Management - Supply Chain Management Determination of the best ordering policy in a manufacturing organisation In a manufacturing organisation, procurement may ha

Value chain, what do you consider to be the main inbound logistics for bank...

what do you consider to be the main inbound logistics for banking

Shareholders expectation and growth stage, Shareholders Expectation and Gro...

Shareholders Expectation and Growth Stage Growth Stage Dividend policy is likely to be influenced with firm's growth stage as like a young rapidly growing firm is probabl

Disadvantage of leasing an asset, Disadvantage of Leasing an Asset A. ...

Disadvantage of Leasing an Asset A. It is a pre-conditional finance as on the needs of asset B. In the long term the lease charges might out-weigh the cost of buying own as

Different evaluation horizons and mbo, Different Evaluation Horizons and MB...

Different Evaluation Horizons and MBO Different Evaluation Horizons Managers might undertake projects that are profitable in short-run. Shareholders on the other hand evalu

#title.financial leverage., Evaluate the importance of leverage of financia...

Evaluate the importance of leverage of financial management of a small scale company

Oogenesis - gametogenesis, Oogenesis - Gametogenesis The maturing proc...

Oogenesis - Gametogenesis The maturing procedure in oogenesis leading to the formation of ovum begins before birth but is not completed until after puberty. The primary oocyte

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