8. The Happy Limited has: One million ordinary shares in issue; 500 000 10% preference shares...

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8. The Happy Limited has: One million ordinary shares in issue; 500 000 10% preference shares in issue, par value R4,50; 2000 8% bonds outstanding, par value R1 000 each. The equity shares currently sell for R4 each, the last dividend was 30c. Happy Ltd has an average ROE of 15% and a pay-out ratio of 60%. The preference shares are trading at R 4 per share. The bonds have 10 years to maturity and a yield-to-maturity of 9% (YTM). The market risk premium is 8%, T-bills are yielding 6%, and the company's tax is 30%. Calculate the weighted average cost of capital. 8. The Happy Limited has: One million ordinary shares in issue; 500 000 10% preference shares in issue, par value R4,50; 2000 8% bonds outstanding, par value R1 000 each. The equity shares currently sell for R4 each, the last dividend was 30c. Happy Ltd has an average ROE of 15% and a pay-out ratio of 60%. The preference shares are trading at R 4 per share. The bonds have 10 years to maturity and a yield-to-maturity of 9% (YTM). The market risk premium is 8%, T-bills are yielding 6%, and the company's tax is 30%. Calculate the weighted average cost of capital.

Answer rating: 100% (QA)

To calculate the weighted average cost of capital WACC for Happy Limited well need to calculate the ... View the full answer