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Question 5 (16 marks) Incarius Ltd has asked you to estimate the WACC for their...

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Question 5 (16 marks) Incarius Ltd has asked you to estimate the WACC for their company. You have collected the following information: The return on risk-free Australian Government Bonds is 2.5% p.a Incarius Ltd has 1,000,000 shares outstanding and its shares are currently trading at $5.50 per share. Beta of Incarius Ltd shares is 1.3, and the expected return on the market is 10.5% Incarius Ltd has 8 million preference shares outstanding at a current price of $11 per share. Preference shares pay a constant dividend of 70 cents per year Incarius Ltd also has $350 million in bank loans. These loans have a variable interest rate which is currently 4.5 % compounded annually. The company faces a 30% corporate tax rate. Compute the WACC for Incarius Ltd. (16 marks)

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