REQUIRED Use the information provided below to calculate the weighted average cost of capital (expressed...
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Accounting
REQUIRED Use the information provided below to calculate the weighted average cost of capital (expressed to two decimal places). (6 marks) INFORMATION MVP Limited approached Nedbank for a long-term loan to partly fund the purchase of expensive, specialised machinery. Nedbank is prepared to grant a loan of R400 000, at a cost of 20%. MVP Limited uses the aftertax cost of debt and the marginal tax rate is 30%. MVP Limited also aims to sell 100000 ordinary shares at R6 each. The cost of the ordinary shares using the capital asset pricing model is 19.90%
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