The Kay Company has the following Capital structure as at 31st March 2019.
                      Based on Book         Value Based on Market Value         % Costs
Debentures    300,000                                        330,000                                 7
Preference     100,000                                         110,000                                 9
Equity               1,500,000                                      1,700,000                            15
Debt                   200,000                                        180,000                                 10
Required:
Determine the Weighted Average cost of capital using:
a) Book Value weights
b) Market Value weights
c) What are the factors affecting Cost of Capital?

Answer rating: 100% (QA)

a To determine the Weighted Average Cost of Capital WACC using Book Value weights we need to calculate the weight of each component of the capital str... View the full answer