Weighted Average Cost of Capital (using market values).

Q1.
Beltrois Ltd has the following capital structure:

Additional Information:
Ordinary Shares
- paying dividend of 10% of par value
- market value $5.00 per share.
Preference Shares
- paying contracted dividend
- market value $2.00 per share.
Company Tax Rate 30%
Required: Calculate the Weighted Average Cost of Capital (using market values).
Tip: The ordinary and preference shares are $2 shares, this affects the amount of dividend
paid.
$ Proportion % Market Value $
Ordinary Shares
Retained Earnings
Total
Weighted Average Cost of Capital (WACC)
(using market values)
Component Market Value $ Proportion % Cost % WACC %
Ordinary Shares
Retained Profits
Preference Shares
Mortgage
Total 100
Q7.
Given that the company tax rate is 30% calculate the imputation credit and taxable amount for the following dividends received by resident individual shareholders. Assume that all dividends are fully franked.:
(a) $3,500
(b) $21,000
(c) $49,000

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