Calculate the weighted average cost of capital

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Reference no: EM132487830

Question 1: Calculate the weighted average cost of capital using the capital asset pricing model to calculate the cost of equity

Question 2: calculate the cost of equity using the gordon growth model infomation:

The following information has been provided on the capital structure of Everstar (Pty)ltd. 3000000 ordinary shares with a market price of R2 per share.The latest dividend declared was 40 cents per share.A dividend growth rate of 10% is expected to be maintained for the immediate future.1 000 000 10% R1 preference shares with a current market value of R1.50 per share.R2 000 000 6% debentures due in 5 years.The current yield to maturity is 9%.R600000 10% bank loan due in April 2022

Additional information

Point 1. The company has a tax rate of 28%

Point 2. The company has a beta of 1.2 a risk free rate of 6% and the return on the market is 12%

Reference no: EM132487830

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