answered out of 10.00 question The following information relates to Trump Wall Constructions Ltd (referred...
70.2K
Verified Solution
Link Copied!
Question
Accounting
answered out of 10.00 question The following information relates to Trump Wall Constructions Ltd (referred to as "TWC Ltd); TWC Ltd has 30,000 bonds outstanding with a face value and price of $1000 each, which have 10 years to maturity and pay an-annual 5% coupon. The yield on the bonds is 6% p.a. TWC Ltd's marginal corporate tax rate is 30%. TWC Ltd has 5 million preference shares on issue, which are currently trading for $5.00 each, giving a total market value of $25 million. They pay an annual dividend of 80 cents. TWC Ltd has 10 million ordinary shares on issue, which are currently trading for $6.00 each, giving a total market value of $60 million. The beta of these shares is 1.2, the risk-free rate of return is 3% and the market risk premium is 6%. Please answer the following questions and provide your response in the space below. Part A, B and C Answer the following questions in the space provided below: a. What is TWC Ltd's cost of preference shares? b. What is TWC Ltd's cost of ordinary shares? c. What is TWC Ltd's weighted average cost of capital (WACC)
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
