Reference no: EM132766787
Using the data in the given table, answer the questions asked in parts (a), (b) and (c).
Items Capital Structure
Wet n Wild Taronga Zoo Jamberoo
Debt ($ million) 40 35 4
Ordinary shares ($ million) 60 65 55
TOTAL CAPITAL ($ million) 100 100 100
Debt (YTM) 6.5% 7.5% 8.00%
Ordinary Equity Beta 1.25 1.10 1.20
The risk-free rate is 4% and the market return is currently 9%. Further, Company Tax rate is 30%.
SHOW ALL WORKING
Required
a. Calculate the cost of ordinary shares for selected two entities (Wet n Wild and Jamberoo).
b. Calculate the after-tax cost of debt for the selected entities (Wet n Wild and Jamberoo).
C. Calculate the weighted average cost of capital (WACC) for selected entities (Wet n Wild and Jamberoo).