question archive Pure Juice Ltd sold bonds to the public five years ago to finance its operation
Pure Juice Ltd sold bonds to the public five years ago to finance its operation
Subject:Computer SciencePrice: Bought3
Pure Juice Ltd sold bonds to the public five years ago to finance its operation. The bond was recently quoted at 89% of face value. The bond has a total face value of GH? 8.5 million and it's currently priced to yield 9%. Pure Juice Ltd shares currently sell for GH? 14 per share. Fifty-three (53%) of Pure Juice Ltd 3.2 million shares are outstanding. To raise additional capital, Pure Juice Ltd issued 500 preference stock that paid GH? 6.5 annually per share and sold for GH? 95 per share. Treasury bills pay 8% and the expected return on the market is 17%. Financial experts have estimated that Pure Juice Ltd has a beta of 0.92. If the corporate tax rate is 36%.
i. Calculate Pure Juice Ltd Weighted Average Cost of Capital
ii. Assume that no information is provided on risk-free rate, beta and expected market returns. Instead, you are told that Pure Juice Ltd Ltd paid a dividend of GH? 4 per share last year and will grow steadily at 6% per year into the future. The stock currently sells for GH? 60 a share. Calculate Pure Juice Ltd's Weighted Average Cost of Capital.
