Nthanda PLC is an international food retailing company financed by both debt and equity capital. The total
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Question:
Nthanda PLC has K50, 000 9% irredeemable preference shares in issue with a nominal value of each share of K100. They are currently quoted at K72 ex-dividend in the market. In addition, the company has issued K12.6 million of 8% redeemable in 5 years bonds. They are currently quoted at K80, ex interest.
Corporate tax currently stands at 35%.
Required:
A. Calculate the cost of:
(i) Equity using the DVM (3 Marks)
(ii) Equity using the Capital Asset Pricing Model (CAPM) (3 Marks)
(iii) Nthanda’s Preference shares (2 Marks)
(iv) Nthanda’s Irredeemable bonds (2 Marks)
Related Book For
Corporate Finance A Focused Approach
ISBN: 978-1439078082
4th Edition
Authors: Michael C. Ehrhardt, Eugene F. Brigham
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