Calculate cost of debt and cost of equity

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Reference no: EM13841929

Task:

A). Pacific Brands has come a long way from manufacturing Dunlop bicycle tyres in 1893. Today, Pacific Brands is famous for marketing iconic brands including Bonds, Sheridan, Tontine, Berlei, Jockey, Voodoo and Dunlop Flooring. Headquartered in Melbourne Australia, Pacific Brands operates throughout Australia, New Zealand, China, Indonesia, and the United Kingdom.

Being part of the treasury team of Pacific Brands, your first exercise is to categorize Pacific Brands capital structure into debt and equity capital. Begin by going to https://www.pacificbrands.com.au/investor-relations/results-and-reports/results-and-reports-2014/ to obtain Pacific Brands 2014 Annual Report and Result Presentation.

If Pacific Bands marginal tax rate is 30%, what is its after tax Weighted Average Cost of Capital? Assuming Pacific Brand's credit rating is AAA, what alternative capital structure would you recommend to lower the cost of capital to the company?

Show all your calculation and limit your report to 1,000 words.

Guidelines:

• You are to calculate cost of debt and cost of equity to work out Weighted Average Cost of Capital.

• To lower the cost of capital of the company, you could suggest an alternative debt and equity capital mix taking into account the company is AAA rated.

B) Financial management provides a framework for pursuing synergy between the functional responsibilities and financial resources of the business organisation. Contemporary organisations integrate strategic decision models capable of maximizing wealth generation. By reading an annual report of any one listed company, write any essay how you think the organisation is working towards this goal of maximizing wealth. Limit your essay between 1,000 to 1,500 words.

Reference no: EM13841929

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