Given the following information below calculate the following question. Ordinary shares: The company has 10 million shares

 Given the following information below calculate the following question. 

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• Ordinary shares: The company has 10 million shares of common stocks, priced at $20 per share and the stock has a beta of 1.3. The stock market's average annual return is 9%, and the treasury bills are currently offering a yield to maturity of 2%. • Preference shares: 0.5 million shares of preferred stocks with face value of 100 per share, the market price for each share is $80; the company pays a fixed amount of $16 dividend for each share of the preferred stock. • Debt: 100,000 of bonds outstanding, with $1,000 par value for each bond, the bond's yield is 8%, and this bond is currently selling for 85% of par value. Wipro's corporate tax rate is 35%. (a) What is Wipro's capital structure? (3 marks) (b) What is Wipro's weighted average cost of capital (WACC)? (6 marks) • Ordinary shares: The company has 10 million shares of common stocks, priced at $20 per share and the stock has a beta of 1.3. The stock market's average annual return is 9%, and the treasury bills are currently offering a yield to maturity of 2%. • Preference shares: 0.5 million shares of preferred stocks with face value of 100 per share, the market price for each share is $80; the company pays a fixed amount of $16 dividend for each share of the preferred stock. • Debt: 100,000 of bonds outstanding, with $1,000 par value for each bond, the bond's yield is 8%, and this bond is currently selling for 85% of par value. Wipro's corporate tax rate is 35%. (a) What is Wipro's capital structure? (3 marks) (b) What is Wipro's weighted average cost of capital (WACC)? (6 marks)

Answer rating: 100% (QA)

a Wipros capital structure is as follows Ordinary shares 10000000 shares x 20 per share 200000000 Pr... View the full answer