Glencore is the largest mining corporation in the world with annual revenues of $220 billion dollars, their headquarters are located in the UK and Switzerland. In financing new mining locations, the corporation uses both debt and equity financing to provide a favorable balance
Glencore is the largest mining corporation in the world with annual revenues of $220 billion dollars, their headquarters are located in the UK and Switzerland. In financing new mining locations, the corporation uses both debt and equity financing to provide a favorable balance between risk and cost of capital. Its financial partners will provide unlimited financing at an annual interest rate of 10% as long as its target capital structure is 25% debt, and 75% common equity. Last year the company paid a dividend of $2.25 per share and the constant growth rate is expected at 4.5%. The current price on the stock market is $14.7 per share. Their corporate tax rate is 32%. They are looking to invest in mining locations in two areas, one in South Africa, and the other in Australia. The
Calculate their Weighted Average Cost of Capital?
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