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Calculate the weighted average cost of capital

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Question: Calculate the weighted average cost of capital for the ZYX Company. It has preference shares 1 million preference shares with a market value of $3.50 each, and an opportunity cost of 11.0 per cent. It has 1 million ordinary shares with market value of $4.50 each, and an opportunity cost of 16.5 per cent. The market value of its debt is $4,000,000 and its cost of debt capital is 9 per cent. The statutory tax rate is 30 per cent, and the proportion of company tax claimed by shareholders is 60 per cent.

Reference no: EM132758920

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