Calculate the weighted average cost of capital wacc for, Financial Management

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Calculate the weighted average cost of capital wacc for

Weighted Average Cost of Capital

Question

The following information is available on the long term financing of Sigma plc:

£m

Ordinary shares of £1 each (15 million) 15

7% irredeemable debentures 28

The current share price is 290p and the market value of debentures is £93 (per £100 nominal).

A dividend of 12 pence per share has just been paid. The expected growth rate of dividends is 6%.

The corporation tax rate 25%

Calculate the weighted average cost of capital (WACC) for Sigma plc.

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Financial Management: Calculate the weighted average cost of capital wacc for

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Financial Management: Calculate the weighted average cost of capital wacc for

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