The following information was available from the Namibian Stock Exchange (NSX) and the past and forecast financial statements of Wooltru Plc.
2013 2014 2015 2016
Dividend per share N$0.60 N$0.63 N$0.65 N$0.6955
200 000 Ordinary shares of N$1 each N$200 000 Nominal value
6% Preference shares N$5 each N$2 000 000 Nominal value
7% Mortgage bond N$3 000 000 Nominal Value
Additional Information
1. The Namibian Government 3-months Treasury bill currently pays 6.5% and does not change with time.
2. The equity beta of the company is 1.6 while the return on an average asset is 13.5%.
3. From 2016, dividends shall grow constantly forever at a rate equal to the growth in dividends from 2015 to 2016.
4. Preference shares are perpetual and have a required return of 8%.
5. The bond’s yield to maturity is 6% and it matures in 10 years time. The bond also pays interest twice annually.
6. The tax rate is 28%.
Required:
Calculate the weighted average cost of capital (WACC) of the company.