Calet plc pays corporation tax at 30 per cent and has the following capital structure: - Ordinary
Question:
Calet plc pays corporation tax at 30 per cent and has the following capital structure:
- Ordinary shares: 1,000,000 ordinary shares of nominal value 25p per share and market value of 79p per share. A dividend of 6p per share has just been paid and dividends are expected to grow by 5 per cent per year for the foreseeable future.
- Preference shares: 250,000 preference shares of nominal value 50p per share and market value of 42p per share, The annual net dividend of 7.5 per cent has just been paid.
- Bonds: £100,000 of 7 per cent irredeemable bonds with a market price of £102 per £100 nominal. The annual interest payment has just been made. Calculate the weighted average after-tax cost of capital of Calet plc.
CorporationA Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
Step by Step Answer:
Ke 5 1 00579 005 00665 005 01165 12 Kp Dp P0 0075 5042 00892 ...View the full answer
Corporate Finance Principles and Practice
ISBN: 978-1292103037
7th edition
Authors: Denzil Watson, Antony Head
