Loans - Loan of $ 12 million at 7.8% nominal interest capitalized monthly; - Loan of $ 5 million at 12% annual interest; Obligations - Issue of 10,500 bonds with a nominal value of $ 1,000, with a maturity of 30 years, at a coupon rate of 8% (interest payments are semi-annual (every 6 months)) and involving fees 4% emission; Shares issued: Ordinary: - 250,000 shares issued at $ 35 / share and paying an annual dividend of $ 1.10 per share; Expected annual dividend growth of 10%; Profits not distributed: $ 10,000,000 recorded on the company's balance sheet; The corporate tax rate is 40%; A) Determine the weighted average cost of capital of the company (WACC)? The company wishes to obtain new capital and is considering a new issue of common shares for an amount totaling $ 5,040,000 at a price of $ 35 / share. The expected issue costs are $ 432,000; B) Determine the new weighted average cost of capital (WACC) of the company after issuance of common shares?
Here is the capital structure of a company:
Loans
- Loan of $ 12 million at 7.8% nominal interest capitalized monthly;
- Loan of $ 5 million at 12% annual interest;
Obligations
- Issue of 10,500 bonds with a nominal value of $ 1,000, with a maturity of 30 years, at a coupon rate of 8% (interest payments are semi-annual (every 6 months)) and involving fees 4% emission;
Shares issued:
Ordinary: - 250,000 shares issued at $ 35 / share and paying an annual dividend of $ 1.10 per share;
Expected annual dividend growth of 10%;
Profits not distributed:
$ 10,000,000 recorded on the company's balance sheet;
The corporate tax rate is 40%;
A) Determine the weighted average cost of capital of the company (WACC)?
The company wishes to obtain new capital and is considering a new issue of common shares for an amount totaling $ 5,040,000 at a price of $ 35 / share. The expected issue costs are $ 432,000;
B) Determine the new weighted average cost of capital (WACC) of the company after issuance of common shares?
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