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What is the company weighted average cost of capital

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Question 1: Witcheries Ltd currently has $200 million of market value debt outstanding. The 9% coupon bonds paid semi-annually have a maturity of 15 years, a face value of $1,000 and are currently priced at $1,024.87 per bond. The company also has an issue of 2 million preference shares outstanding with a market price of $20. The preference shares offer an annual dividend of $1.20. Witcheries also has 14 million ordinary shares outstanding with a price of $20.00 per share. The share has a beta of 1.1. The current Treasury bills pay 3% and market earns a return of 10%. If the corporate tax rate is 30%, then what is the company's weighted average cost of capital ?

Reference no: EM132513686

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