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Question 7 8 Marks A company has 1,000,000 shares outstanding, and each share is currently worth R20....

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Finance

Question 7 8 Marks
A company has 1,000,000 shares outstanding, and each share iscurrently worth R20. The shares have beta of 1.2. The company alsohas 10-year bonds outstanding with a par value of R10,000,000, acoupon rate of 6%, and yield-to-maturity of 7%. The yield on thebonds is currently 2 percentage points above the risk-free rate and4 percentage points below the expected return on the overallmarket.
Required:
7.1. What is the company’s WACC if the corporate tax rate is35%?

Answer & Explanation Solved by verified expert
4.2 Ratings (540 Votes)
Market Value of Equity No of Shares Outstanding Share Price 1000000 R20 R20000000 To find the market value of debt we need to put the following values in the    See Answer
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