Weighted Average Cost of Capital
Question
The following information is available on the long term financing of Sigma plc:
£m
Ordinary shares of £1 each (15 million) 15
7% irredeemable debentures 28
The current share price is 290p and the market value of debentures is £93 (per £100 nominal).
A dividend of 12 pence per share has just been paid. The expected growth rate of dividends is 6%.
The corporation tax rate 25%
Calculate the weighted average cost of capital (WACC) for Sigma plc.