G is a public limited company and manufactures washing machines. Breakdown

Question

G is a public limited company and manufactures washing machines. Breakdown

of the company's long term funding together with current market values is below ;

£1 ordinary shares- total nominal value =40 million and current market value = £1.20 per share (cum dividend)
£0.50 7% Irredeemable preference shares - total nominal value = 15 million and current market value = 0.40 per shares ( ex div)
8% irredeemable debt; face value £100 - total nominal value = 10 million and current market value = 104 (cum interest )

G's most recent ordinary dividend is due to be paid very soon and totals £9.5 million. Interest on debt is also due to paid soon. Company's dividend have increased in a regular fashion over the past 7 years and the 2019 dividend is 25% higher than the dividend in 2012. Corporate tax rate stands at 19%.

What is the current WACC?

Answer 1

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