Calculate the weighted average cost of capital

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Question - Wonderlust Limited has issued debt and equity securities as follows:

Debt: 5,000 bonds with a face value of $1,000. These bonds are currently priced at $1,200.00 and yield 8.2%.

Ordinary Shares: 500,000 fully paid ordinary shares issued at $25.00 currently trade on the market at a price of $24.00. The most recent dividend was $2.00, and dividends are expected to grow at 3% forever.

Preference shares: 64,000, preference shares with an issue price of $30.00 are currently selling on the market at $31.25 and paying an annual dividend of $2.50 in perpetuity.

Tax: The corporate tax rate is 30 percent.

Required - Calculate the Weighted Average Cost of Capital (WACC) for Wonderlust Limited.

Reference no: EM133183918

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