3. The joint stock company has a total capital of 330 mils. USD. The company has the following structure of capital:
a. 250 mil. USD of shares where 180 mils. USD are in common stock and 70 mils. USD are in preferred stock
b. Long-term loans are 50 mils. USD with 2 % p.a.
c. Short-term loans are 30 mils. USD with 9 % p.a
. Determine the weighted average of capital for the following company under these conditions:
I. Income tax is 20 %
II. Preferred stocks have a nominal value of 10 000 USD per share. They traded for 11 000 USD and guaranteed (promised) a permanent priority dividend 1 000 USD annum per share.
III. Common stocks were issued at a nominal value of 2 000 USD per share. Flotation cost of these new shares was calculated at 50 USD per share. Shares are traded on the market for 2 400 USD per share. The dividend is assumed at 10 % of par value in the first year, where the expected growth of dividends is assumed at 1 % every year.
IV. Long-term loans are provided at a current rate of 1 % every year. V. Short-term loans have a current rate of 10 %. Note: each example should be calculated on the separate shield in Excel Document, and only one Excel Document with your ID and name should be uploaded to Homework Vaults in IS. Thanks ☺ Have fun