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You have been presented with following information from Kim Ltd. Source of Capital Book Value Market Value Long-term debts 9 360 000 Preference shares Ordinary shares Total 14 976 000 Required: 149 760 3 931 200 Fair Play Company has an average tax rate of 28% 224 640 11 232 000 a) Calculate the WACC based on the book value weights. (Present your answer in a tabular form as shown below) Weight Type of Capital Book Value Before-tax cost 9% 14% 18% Cost (%) Weighted cost (%) b) Compare the book value and market value method of calculating the WACC above. You have been presented with following information from Kim Ltd. Source of Capital Book Value Market Value Long-term debts 9 360 000 Preference shares Ordinary shares Total 14 976 000 Required: 149 760 3 931 200 Fair Play Company has an average tax rate of 28% 224 640 11 232 000 a) Calculate the WACC based on the book value weights. (Present your answer in a tabular form as shown below) Weight Type of Capital Book Value Before-tax cost 9% 14% 18% Cost (%) Weighted cost (%) b) Compare the book value and market value method of calculating the WACC above.
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The calculation of the weighted cost of each type of capital is as follows Weighted cost of longterm ... View the full answer
Related Book For
Financial Accounting Tools for Business Decision Making
ISBN: 978-0470239803
5th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Posted Date:
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