Weighted average cost of capital for skosana ltd

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Skosana Ltd manufactures cables that are used in the construction sector. The company uses debt and equity to finance operations. Share capital amounts to R50m and 100m ordinary shares have been issued. The current share price on the JSE is R1.30. The company's long-term debentures are currently yielding 9% and the book value of the debentures is R150m. The coupon rate is 11%. The company's beta is estimated to be 1.20 and the market risk premium is 6%. Government bonds are currently yielding 7.5% per year. The company tax rate is 28% and retained earnings amount to R40m.

REQUIRED:

Use the market and book value to calculate the weighted average cost of capital for Skosana Ltd.

 

Reference no: EM132623163

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