Calculate the wacc and give corporate opinion

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Reference no: EM132528012

After reading this article you have been requested to advice an investment group if they should or should not invest in a gas and oil business located in Nigeria, your opinion that you will render will be based on the WACC .

Question 1: Calculate the WACC and give your opinion using the information given below.

a) Vision oil and Gas Company has 10 million shares each with a value of $4.20, whose cost is 7.5%. It has $30 million of 5% bonds with a market value of 101.00 and an after-tax cost of 3.5%. It has a bank loan of $5 million whose after-tax cost is 3.2%. It also has 2 million 8% preference shares of $1 whose market price is $1.33 per share and whose cost is 6%.

(i) Calculate the WACC

(ii) Give your corporate opinion

Reference no: EM132528012

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