Calculate the wacc at target ratios

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Question 1: 22% ordinary shares issued (2000000 shares) of R8000000, retained earnings of R1000000, 12% preference shares of R4000000 and long term loan of R5000000. the company recently paid a dividend of R3.40 per share and according to the annual shareholders report, the company expects future dividend growth to be 4%. preference shares are convertible. the long term loan matures 10 years from today and carries an interest rate of 15,72% per annuam. the corporate tax is 30%. calculate the WACC at the current market value and also the target debt:equity ratio as 40% debentures, 15% preference shares and 45% equity. use these ratios to calculate the WACC at target ratios

Reference no: EM132545668

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