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Expected return on the market

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Hoopla Ltd has provided the following information Bonds with a Face Value of $4M. Interest payments are semi-annual at a rate of 12.5%pa Preference Shares totalling $1.5M were issued at $3 each paying a fixed dividend of 10% Ordinary Shares totalling $7.5M were issued at $0.50, five years ago Bonds are maturing in 3 years and the current interest rate is 10%pa Preference Shares are trading at $2.50 while Hoopla Ordinary Shares are trading at $0.63 The expected risk free rate of return is 6.5% with the expected return on the market being 16%. Hoopla has a Beta equal to that of the market.

WACC = 13.108

Weight = 1

Total Market Value = 14953785

Reference no: EM132364560

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