Question 4 (15 marks)

Using the data in the given table, answer the questions asked in parts (a), (b) and (c).

Items	Capital Structure
	Wet n Wild	Taronga Zoo	Jamberoo
Debt ($ million)	40	35	45
Ordinary shares ($ million)	60	65	55
TOTAL CAPITAL ($ million)	100	100	100
Debt (YTM)	6.5%	7.5%	8.00%
Ordinary Equity Beta	1.25	1.10	1.20

The risk-free rate is 4% and the market return is currently 9%. Further, Company Tax rate is 30%.

Required:

1. Calculate the cost of ordinary shares for selected two entities (Wet n Wild and Jamberoo). (6 marks)
2. Calculate the after-tax cost of debt for the selected entities (Wet n Wild and Jamberoo). (3 marks)
3. Calculate the weighted average cost of capital (WACC) for selected entities (Wet n Wild and Jamberoo). (6 marks)

Answer 4:

1. [Answer and show workings here]

Wet n Wild (CAPM) =

Jamberoo (CAPM) =

2. [Answer and show workings here]

Wet n Wild =

Jamberoo =

3. [Answer and show workings here]

Wet n Wild (WACC) =

Jamberoo (WACC) =