Question: Find the WACC - Danys Potato Pty Ltd operates under classical tax system with a company tax rate of 30%. The company has 16,000 6.2%
Find the WACC -
Danys Potato Pty Ltd operates under classical tax system with a company tax rate of 30%. The company has 16,000 6.2% coupon bond outstanding with $1,000 par value and 25 years to maturity. The bond is currently selling at $1,080. The bonds make half-yearly coupon payment. The company has 535,000 shares outstanding which currently selling at $81 per share. The company also has 20,000 4.2% preference shares outstanding which are currently selling at $92 and the par value of these preference share is $100. The company is riskier than the market as represented by its systematic risk of 1.2. the market risk premium and the risk-free rate are 7% and 3.5% respectively.
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