Description of this paper

Annual tax and rates

Description

solution


Question

Cost of Capital;A new $100 million project will be financed with;$35 million Bonds issued at par that pay annual 8% coupons;$30 million Preference shares costing 12% per annum before tax;Remainder Equity costing 17% per annum.;The company also has an overdraft of $5 million that costs 10% before tax. The company?s average tax rate is 30% and the marginal tax rate is 40%. Calculate the weighted average cost of capital (WACC) for the project.

 

Paper#18255 | Written in 18-Jul-2015

Price : $27
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