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Questions The structure of BigCo is such that the company has R75 million of shareholders'...

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Questions The structure of BigCo is such that the company has R75 million of shareholders' capital and reserve, R25 million market value of outstanding debt, and these funds are invested in a diversified portfolio of assets, which are expected to earn a return equal to the market return. The risk-free rate of return in the market is 6%, the company's debt is yielding 8% and investors expect the market to give a return of 12%. What is the return expected from the equity shares in BigCo? (ignore tax) A B D 12% 13% 13.33% 13.5% 1 The beta of the equity shares in a tax-free environment is: A B 1.11 1.22 1.25 D 1.33 The company's weighted average cost of capital is: A B 12% 13% 13.33% 13.5% C D

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