- General Defences to Criminal Liability Assignment UK
- The Principles of Business and Resource Management for Leaders of Adult Social assignment NVQ Level 5 Assignment UK
- Printed Circuit Board (PCB) Inspection Jig BTEC (RQF) Level 4 Assignment, PC, UK
- Property Law: Research, Case Analysis, and Legal Advice Assignment UK
- SCEE08002 Structural Mechanics 2 Laboratories Assignment UK
- Working in Partnership in Health and Social Care Assignment UK
- Aircraft Structural Mechanics 3 Design & Optimisation Project UK
- Responsibilities of a Health and Social Care Worker NVQ Level 3 Assignment, LCPA UK
- TC50324E: Measurement and Documentation Assignment 1, UOWL, UK
- Business Ethics and Responsible Management Semester 1 Assignment, URBS, UK
- Working in Partnership in Health and Social Care Management Assignment UK
- HH5561 Health Economics and Decision Modelling Assignment, UOG, UK
- Civil CEP: Numerical Analysis Assignment 1, UOB, UK
- CIPD Level 3 Foundation Unit 1 Assignment, OU, UK
- HSC301 State the Roles and Responsibilities Assignment, ILC, UK
- ProQual Level 6 NVQ Diploma in Occupational Health and Safety Practice Assignment UK
- Corporate Finance and Business Valuation Assignment
- HNC-D 10 Financial Accounting Assignment
- MN5612 Digital Marketing Strategy Assignment
- Social Roles In The Caring Professions Assignment Brief
FIN6003 Delta Ltd wishes to calculate its current cost of capital for use as a discount rate in investment appraisal: Financial Management Assignment, AU, UK
| University | Arden University (AU) |
| Subject | FIN6003 Financial Management Assignment |
Question 3
Delta Ltd wishes to calculate its current cost of capital for use as a discount rate in investment appraisal. The following financial information relates to Delta Ltd:
Financial Position statement extracts as at 31 December 2022 Are You Looking for Answer of This Assignment or Essay
The ordinary shares of Delta Ltd have an ex-div market value of £4.70 per share and an ordinary dividend of £0.36 per share has just been paid. Ordinary dividends are expected to grow in the future by 4% per year.
The preference shares of Delta Ltd are not redeemable and have an ex-div market value of £0.40 per share.
The 7% bonds are redeemable at a 5% premium to their nominal value of £100 per bond and have an ex-interest market value of £104.50 per bond.
The bank loan has a variable interest rate that has averaged 4% per year in recent years.
Delta Ltd pays profit tax at an annual rate of 19% per year.
Required:
a) Calculate the market value Weighted Average Cost of Capital (WACC) of Delta Ltd.
b) Discuss the pros and cons of using the WACC as a discount rate to evaluate capital budgeting projects.
c) Explain the impact of tax on the WACC according to the modified Modigliani & Miller (M&M II, 1963) capital structure model.
Are You Looking for Answer of This Assignment or Essay
Elevate your academic experience with our tailored support – Assignment Helper UK and specialized Finance Assignment Help Services in the UK. Crafted for students at Arden University (AU), our expertise extends to Financial Management, focusing on the intricacies of FIN6003.
Explore the challenge faced by Delta Ltd as they aim to calculate their current cost of capital for use as a discount rate in investment appraisal. UK students seeking guidance can invest in their academic success by leveraging our expert assistance. Simplify financial complexities, ensure excellence, and advance confidently in your coursework with our dedicated support.
Answer
