What will shosholoza marginal cost of capital

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Point 1: Shosholoza resurfacing has plans to retain R125000 of its income this year for reinvestment. Financial analysts have determined that the firms after tax cost debt is 4.8 percent, it's cost of internal equity is 9 percent, and it's cost of external equity is 11.5 percent. Shosholoza expects to finance capital budgeting projects so as to maintain its current capital structure which consist of 55 percent of debt. Shosholoza has no preference shares.

Question 1: What will shosholoza marginal cost of capital be if it's total capital budgeting needs are R3 million for the year?

Reference no: EM132493951

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