What is working capital? Why is working capital important? Telstra Limited, the largest telecommunication company in Australia,
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- What is working capital? Why is working capital important?
- Telstra Limited, the largest telecommunication company in Australia, is subject to a flat corporate tax rate of 30% and has 1,000,000 ordinary shares currently trading at $2.75 per share. Next year's ordinary dividend per share is $0.30 and the dividends are expected to grow indefinitely at 7% per annum
The company also has 300,000 preference shares with a current market value of $3.12 per share and the preference dividend per share is fixed at $0.25.
Finally, Telstra Limited has 1,000 bonds outstanding with a market value of $500 each and the current yield to maturity is 6.5% per annum. The bonds mature in 5 years' time.
Determine Telstra's weighted average cost of capital (WACC). Provide formulas
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