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An entity has the following information in its balance sheet. Ordinary shares of TZs 50 each TZS 2,500,000 1,000,000 The ordinary shares are currently quoted at TZS 130 each and the loan notes are trading at TZS 72 per shs100 nominal. The ordinary dividend of TZS 15 has just been paid with an expected growth rate of 10%. Corporation tax is currently 12% Unsecured loan notes 30% Required: Calculate the Weighted Average Cost of Capital (WACC) for this entity.

An entity has the following information in its balance sheet. Ordinary shares of TZs 50 each TZS 2,500,000 1,000,000 The ordinary shares are currently quoted at TZS 130 each and the loan notes are trading at TZS 72 per shs100 nominal. The ordinary dividend of TZS 15 has just been paid with an expected growth rate of 10%. Corporation tax is currently 12% Unsecured loan notes 30% Required: Calculate the Weighted Average Cost of Capital (WACC) for this entity.

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter15: Dividend Policy
Section: Chapter Questions
Problem 5P
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An entity has the following information in its balance sheet. Ordinary shares of TZS 50 each TZS 2,500,000 12% Unsecured loan notes 1,000,000 The ordinary shares are currently quoted at TZS 130 each and the loan notes are trading at TZS 72 per shs100 nominal. The ordinary dividend of TZS 15 has just been paid with an expected growth rate of 10%. Corporation tax is currently 30% Required: Calculate the Weighted Average Cost of Capital (WACC) for this entity.
Transcribed Image Text:An entity has the following information in its balance sheet. Ordinary shares of TZS 50 each TZS 2,500,000 12% Unsecured loan notes 1,000,000 The ordinary shares are currently quoted at TZS 130 each and the loan notes are trading at TZS 72 per shs100 nominal. The ordinary dividend of TZS 15 has just been paid with an expected growth rate of 10%. Corporation tax is currently 30% Required: Calculate the Weighted Average Cost of Capital (WACC) for this entity.
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