Weighted Average Cost of Capital
Use the information below to calculate the weighted average cost of capital (WACC) for Bravo plc.
£m
Ordinary shares of £1 each (13 million) 13
8% irredeemable debentures 22
The current share price is 320p and the market value of debentures is £85 (per £100 nominal).
A dividend of 16 pence per share has just been paid. The expected growth rate of dividends is 8%.
Corporation tax rate is 20%.
a) Calculate the weighted average cost of capital (WACC) for Alpha plc.