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Calculate the after-tax wacc for growth ltd

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Reference no: EM132700728

What is an estimate of Growth Ltd.'s cost of equity?

Growth Ltd.'s current share price is $20 and it is expected to pay a $1 dividend next year. After that, the firm's dividends are expected to grow at a rate of 4% per year. Growth Ltd has issued five million of these ordinary shares.

Growth Ltd also has one million preference shares outstanding that pay an annual $2 fixed dividend. If this share is currently priced at $28, what is growth's cost of preference shares?

Growth Ltd has an existing bond issue (2000 issued bonds) with a coupon rate of 6% paid semi-annually. The bonds are set to mature in 5 years-time and have a current market price of $1100. Face value equals $1,000. What is Growth's before-tax and after-tax cost of Debt?
Assume that Growth's tax rate is 30%.

Calculate the after-tax WACC for Growth Ltd?

Reference no: EM132700728

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