Question: please do fast You are required to determine the weighted average cost of capital of Blue Bell Itd using ( Book valuc weights and (ii)
You are required to determine the weighted average cost of capital of Blue Bell Itd using ( Book valuc weights and (ii) Market value weights. The following information is available for your perusal. The Blue Bell Ltd present book value capital structure is as follows: Debenture Preference Shares Equity Shares (8.'100 per debenture) (8, 100 per share) (8, 10 per Share) , '15,00,000 8,'5,00,000 8, 20,00.000 All these securities are traded in the capital markets. Recent prices are debenture @a,'120. preference share @ 8.'130 and equity shares @,'28. Anticipated external financing opportunities are: (i). a, '100 per debenture redeemable at par, 20 years maturity, 8% coupon rate, 4% flotation cost, sale price a, '100 (11). &, '100 preference share redeemable at par, 15-year maturity, 10% dividend rate, 5% flotation costs, sale price &, 100 (iii). Equity shares 8, '2 per share flotation costs, sale price &,'28 In addition, the dividend expected on the equity share at the end of the year a'2 per share; the anticipated growth rate in dividend is 7% and the company has the practice of paying all its earnings in the form of dividends. The corporate tax rate is 50%
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