Beaufort Ltd is a leading national manufacturer of sports apparel for GAA and soccer clubs. The company is financed through a combination of ordinary shares, irredeemable preference shares and redeemable debentures. The following information has been provided by the Finance Director: Beaufort Ltd has 860,000 €1 ordinary shares in issue which have a current market value of €3.30 per share. The company has just paid a dividend of €0.11per share. Dividend payments for the past 5 years have been as follows: 2014 €52,500 2015 €56,300 2016 €59,500 2017 €63,200 2018 €68,600 Beaufort Ltd has issued 600,000 €1 7% irredeemable preference shares which are currently trading at €1.55. The dividend is due to be paid next week. The company also has €1,100,000 8.25% redeemable debentures in issue. The current market price of the debentures are €93 and they are due for redemption in three years’ time. The tax rate is 30%. Requirements: Calculate the following The cost of equity. The cost of preference share capital. The cost of redeemable debentures. The weighted average cost of capital.
Beaufort Ltd is a leading national manufacturer of sports apparel for GAA and soccer clubs. The company is financed through a combination of ordinary shares, irredeemable preference shares and redeemable debentures.
The following information has been provided by the Finance Director:
Beaufort Ltd has 860,000 €1 ordinary shares in issue which have a current market value of €3.30 per share. The company has just paid a dividend of €0.11per share. Dividend payments for the past 5 years have been as follows:
2014 €52,500
2015 €56,300
2016 €59,500
2017 €63,200
2018 €68,600
Beaufort Ltd has issued 600,000 €1 7% irredeemable preference shares which are currently trading at €1.55. The dividend is due to be paid next week.
The company also has €1,100,000 8.25% redeemable debentures in issue. The current market price of the debentures are €93 and they are due for redemption in three years’ time.
The tax rate is 30%.
Requirements:
- Calculate the following
- The
cost of equity . - The cost of
preference share capital.
- The cost of redeemable debentures.
- The weighted average cost of capital.
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