Find what is rio tinto weighted average cost of capital

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Question 1: The following information relates to Rio Tinto Mining Corporation. What is Rio Tinto's weighted average cost of capital?

Point 1: 10 years ago, Rio Tinto issued 80,000 bonds with 16 yearsmaturity and a face value of $1000 each, pays an - annualcoupon amount of $100 each. The yield on the bonds is 15% p.a. Rio Tinto's marginal corporate tax rate is 30%.

Point 2: ?Rio Tinto has 15 million preference shares on issue, which are currently trading for $3.20 each, giving total market value of $48 million. They pay an annual dividend of 30 cents per share.

Point 3: Rio Tinto has 21.5 million ordinary shares on issue, which are currently trading for $4 each. These shares are expected to pay an annual dividend of $0.75 next year, and this dividend is expected to grow at the constant rate of 3% in perpetuity.

Reference no: EM132551521

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