What is the current WACC

Assignment Help Financial Accounting
Reference no: EM132854498

Question - G is a public limited company and manufactures washing machines. Breakdown of the company's long term funding together with current market values is below; £1 ordinary shares- total nominal value = 32 million and current market value = £2.73 per share (cum dividend) £0.50 7% Irredeemable preference shares - total nominal value = 11 million and current market value = 0.56 per shares ( ex div) 8% irredeemable debentures =total nominal value = 13 million and current market value = 103 (cum interest )

G's most recent ordinary dividend is due to be paid very soon and totals £7.04 million. The debentures are redeemable at par in four years time. Company's dividend have increased in a regular fashion over the past 5 years and the 2017 dividend is 27.6% higher than the dividend in 2012. Corporate tax rate stands at 30%.

G board of directors is currently in discussions with one of his ex-managers who no works in South Africa. The current owners wish to retire and G would have to pay 12.5 million to acquire South Africa using the net present value approach. However the majority of the 12.5 million would need to be funded by additional borrowing which are likely to have an interest cost of at least 11% per annum. The board is unsure about the cost of capital which should be used for the net present value calculation.

Required - What is the current WACC?

Reference no: EM132854498

Questions Cloud

Compute the combined checking and savings account balance : Compute the combined checking and savings account balance for each record in the database. Then sort the records by the number of months as a customer
Principles of marketing strategy development : Critically analyse the key principles of marketing strategy development and Compare and contrast marketing strategies for new and growth markets
Causes Of Internal Conflict In A Nation Or Regional : Write a paper addressing the causes of internal conflict in a nation or regional area of your choice.
Discuss pros of choosing an integrated paid time-off policy : Discuss the pros and cons of choosing an integrated paid time-off policy instead of multiple specific paid time-off policies-for example, sick leave
What is the current WACC : G board of directors is currently in discussions with one of his ex-managers who no works in South Africa. What is the current WACC
Construct a confidence interval for the proportion : Construct a 90% confidence interval for the proportion of all working men who hold this view.
Does make difference if susan was employed in florida office : Would any exceptions to Susan's at-will employment apply under these circumstances? Does it make a difference if Susan was employed in our Florida office?
Human interactions as well as monetary investments : Reorganizing a company can be very difficult and time consuming. It involves various resources including human interactions as well as monetary investments.
Find the score corresponding : (a) Find the score corresponding to = 19. (Enter an exact number.) score corresponding to = 37. (Enter a number.) = -2. (Enter an exact number.) (b) Find the z

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd