Adidas has $20 million capital, of which, 30% is equity. Shareholders required rate of return...
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Adidas has $20 million capital, of which, 30% is equity. Shareholders required rate of return is 12% p.a. Creditors charge a 8% p.a interest.
- Calculate Adidas Weighted Average Cost of Capital. Answer: 9.2%9.1%9.5%9.3%9.4% (2.5 marks)
- An additional $3 million of equity capital has been raised to invest in a new marketing campaign. Due to increased risk of higher industry competition, shareholders required rate of return increases by 3% p.a. What is Adidas new WACC? Answer: 10.47%10.74%10.17%10.97%10.88% (2.5 marks)
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