Make weighted average cost of capital of lanka ventures

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Question - You are the financial Manager of Lanka Ventures PLC and senior management has requested you the estimate the weighted average cost of capital of your company. You are provided with following information.

Debt Capital

Debt capital represents 40% of the capital structure

Company currently borrowing at 10% interest rate

Corporate tax rate 30%

Equity capital

Equity capital represents 60% of the capital

Beta factor applicable to the company 1.8

Market rate of return is 18%

Risk free rate of return is 6%.

Required - Make Weighted average cost of capital of Lanka Ventures?

Reference no: EM132826190

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