QUESTION THREE Ziggy Ltd has 1000000 shares in issue and is currently paying a dividend of R2 per share with a growth of 5%. The shareholders require a rate of return of 24%. The preference shares have no conversion rights and carry a dividend pay-out ratio of 15%. Similar preference shares are currently trading at 12%. The long-term loan matures in 10 years and carries an interest rate of 16%. Current long-term interest rates for a similar loan are 18,34%. Bank overdraft rate is 20% and the tax rate is 40%. Required: 3.1 Calculate the WACC at market value. 3.2 Calculate the target WACC if the optimal debt to equity ratio is ordinary shares 60%, preference shares 20% and long-term loans 20%. QUESTION THREE Ziggy Ltd has 1000000 shares in issue and is currently paying a dividend of R2 per share with a growth of 5%. The shareholders require a rate of return of 24%. The preference shares have no conversion rights and carry a dividend pay-out ratio of 15%. Similar preference shares are currently trading at 12%. The long-term loan matures in 10 years and carries an interest rate of 16%. Current long-term interest rates for a similar loan are 18,34%. Bank overdraft rate is 20% and the tax rate is 40%. Required: 3.1 Calculate the WACC at market value. 3.2 Calculate the target WACC if the optimal debt to equity ratio is ordinary shares 60%, preference shares 20% and long-term loans 20%