Weighted average cost of capital for britcoin

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Britcoin Ltd. (Britcoin) has $10,000,000 of bonds outstanding with an annual coupon rate of 8.5%. The bond issue matures in three years, and the current yield is 9.75%.

Britcoin has 2,000,000 common shares outstanding with a current market price of $19.85 per share. The common shares have a beta (β) of 1.15, the expected market return (RM) is 15.5%, and the risk-free rate (RF) is 3.5%.

The $18,000,000 of preferred shares is represented by 300,000 shares of $6 preferred shares.

Britcoin's curr ent required rate of return is 11.5%. Britcoin is subject to tax at a rate of25%.

Required:

Calculate the weighted average cost of capital for Britcoin.

Reference no: EM132696490

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