ACC414/ACC444 - IN-CLASS TEST
Question 1
Given below are capital components and their costs in Chitova Chisamarengu ltd
Capital type
Equity
Preference
Debt A
Debt B
Market Value/ share or bond
$ 2.50
$1.50
$95
$102
Cost before tax
14%
9%
8%
7%
There 10,000 ordinary shares, 5,000 preference shares and nominal value of debt A is $10,000 and
that of debt B is $12,000. Tax rate is 30%.
Calculate the after tax WACC
Page 1 of 1
0
