Megatron Ltd has an equity beta of 1.5. The market risk premium in South Africa...
60.1K
Verified Solution
Link Copied!
Question
Accounting
Megatron Ltd has an equity beta of 1.5. The market risk premium in South Africa is expected to be 5% and yield on government bond (risk free rate) is currently 9.5%. Megatron has issued bonds and its R100 par value bond is currently trading at R94.50. The coupon is 10%. The maturity date is in 5 years time and the corporate tax rate is 28%. Interest is payable annually in arrears. What is the weighted average cost of capital if target debt to equity ratio is 50% and the cost of equity and debt is 15% and 8% respectively
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
- Unlimited Question Access with detailed Answers
- Zin AI - 3 Million Words
- 10 Dall-E 3 Images
- 20 Plot Generations
- Conversation with Dialogue Memory
- No Ads, Ever!
- Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Best
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.