Pick Ltd has the following capital structure which is considered optimal. The investors of Pick ltd expect earnings and dividends to grow at a constant...

      

Pick Ltd has the following capital structure which is considered optimal.
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The investors of Pick ltd expect earnings and dividends to grow at a constant rate of 9% in the future.
The company has just paid a dividend of sh.3.6 per share and its stock currently sells at a price of sh.60 per share. Treasury bonds yield 11% and the return on the market is 14%.Pick ltd beta is 1.51 New preferred stock can be sold at sh.100per share with a dividend of sh.11 per share and flotation costs of sh.5 per share.
The company’s tax rate is 30%and it pays out all its earnings as dividend.12% debentures with a maturity of 10 years can be sold at sh.92 per debenture
Required
The weighted average cost of capital (WACC) using market values

  

Answers


Kavungya
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Kavungya answered the question on April 11, 2022 at 11:27


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