A company has in issue 9% $20 nominal value preference shares. Their current market price is $40 and the company’s tax rate is 30%.What is the company’s cost of preference shares?
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9 .A firm has a bank loan with a 10% interest rate. The firm also has in issue 8% preference shares trading at par and has estimated that its cost of ordinary shares is 18%. The firm has a 30% tax rate.What is the weighted average cost of capital if the firm uses a capital structure comprising 50% debt and an even split between preference and ordinary shares?
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10 .A firm’s weighted average cost of capital is minimised when its debt to equity ratio is 4:1.Which of the following statements is most accurate?
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