Question 7 8 Marks
A company has 1,000,000 shares outstanding, and each share iscurrently worth R20. The shares have beta of 1.2. The company alsohas 10-year bonds outstanding with a par value of R10,000,000, acoupon rate of 6%, and yield-to-maturity of 7%. The yield on thebonds is currently 2 percentage points above the risk-free rate and4 percentage points below the expected return on the overallmarket.
Required:
7.1. What is the company’s WACC if the corporate tax rate is35%?
