The following information relates to MHP Ltd. MHP has 7 million ordinary shares on issue, which...
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The following information relates to MHP Ltd. MHP has 7 million ordinary shares on issue, which are currently trading for $12.00 each. These shares are expected to pay an annual dividend of $1.00 next year, and this dividend is expected to grow at a constant rate of 2% in perpetuity. MHP has 5 million preference shares on issue, which are currently trading for $10.00 each, giving a total market value of $50 million. They pay an annual dividend of 50 cents per share. MHP has 10,000 bonds outstanding with a face value of $1,000 each, which have 5 years to maturity and pay an-annual 10% coupon. The yield on the bonds is 10% p.a. SHP's corporate tax rate is 30%. i. iii. iv. What is MHP's cost of debt? (2 marks) What is MHP's cost of preference share capital? (2 marks) What is MHP's cost of ordinary share capital? (2 marks) What is MHP's Weighted Average Cost of Capital (WACC)? (14 marks) The following information relates to MHP Ltd. MHP has 7 million ordinary shares on issue, which are currently trading for $12.00 each. These shares are expected to pay an annual dividend of $1.00 next year, and this dividend is expected to grow at a constant rate of 2% in perpetuity. MHP has 5 million preference shares on issue, which are currently trading for $10.00 each, giving a total market value of $50 million. They pay an annual dividend of 50 cents per share. MHP has 10,000 bonds outstanding with a face value of $1,000 each, which have 5 years to maturity and pay an-annual 10% coupon. The yield on the bonds is 10% p.a. SHP's corporate tax rate is 30%. i. iii. iv. What is MHP's cost of debt? (2 marks) What is MHP's cost of preference share capital? (2 marks) What is MHP's cost of ordinary share capital? (2 marks) What is MHP's Weighted Average Cost of Capital (WACC)? (14 marks)
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1 Cast of debt field of maturity X C1 Corporate taxrate 108 x 103 72 1 Cost of preferenc... View the full answer
Related Book For
Financial Accounting and Reporting
ISBN: 978-0273744443
14th Edition
Authors: Barry Elliott, Jamie Elliott
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