Question - Calculate the Weighted Average Cost of Capital (WACC) of Alborz Company using the following information:
A. Alborz has 5,000,000 outstanding ordinary shares. Current price is $3 per share. The next dividend on Alborz share will be $0.55and these dividends are expected to grow at the rate of 10% p.a.
B. Alborz has 3,000,000 preference shares. Market price of preference share is $2 and the current dividend on Preference share is $0.45.
C. Alborz has 1,750 bonds that currently sell at their par value with 10 years to maturity coupon rate is 8% per year with face value of $1000. Tax rate is 30%.