Your company's shares sells for R50 per share, its last dividend (D0) was R2.00, its growth rate is a constant 5 percent, and the company would incur a flotation cost of 15 percent if it sold new ordinary shares.Net income for the coming year is expected to be R500,000 and the firm's payout ratio is 60 percent.The firm's ordinary equity ratio is 30 percent and it has no preference shares outstanding.The firm can borrow up to R300,000 at an interest rate of 7 percent; any additional debt will have an interest rate of 9 percent.Your company's tax rate is 40 percent.If the firm has a capital budget of R1,000,000, what is the WACC for the last rand of capital the company raises?

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The Answer of Your company's shares sells for R50 per share, its last dividend (D0) was R2.00, its growth rate is a constant 5 percent, and the company would incur a flotation cost of 15 percent if it sold new ordinary shares.Net income for the coming year is expected to be R500,000 and the firm's payout ratio is 60 percent.The firm's ordinary equity ratio is 30 percent and it has no preference shares outstanding.The firm can borrow up to R300,000 at an interest rate of 7 percent; any additional debt will have an interest rate of 9 percent.Your company's tax rate is 40 percent.If the firm has a capital budget of R1,000,000, what is the WACC for the last rand of capital the company raises?

Your Company's Shares Sells for R50 Per Share, Its Last