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Calculate cost of preference shares and cost of equity

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Reference no: EM132755426

For the year ended 31st December 2019, the following summarized financial information of "AVIVA Plc" was revealed by their books of account.

No of shares issued (Ordinary) 300 mn, Value per share (Ordinary) $ 9.
Risk free rate 10%
Interest paid $50mn
Corporate tax rate 20%
Value of Debt $400 m
Value of Preference shares $400mn
Dividend (Preference Shares) $80 mn
Market Rate 20% Beta factor 0.9.

Problem 1: Based on the above information you are required to calculate,

(a) Cost of Equity.
(b) Cost of Debt
(c) Cost of Preference shares
(d) WACC (Weighted Average Cost of Capital)

Reference no: EM132755426

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