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GoT Limited Capital Structure Analysis

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ndhlovulungile9
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8 views1 page

GoT Limited Capital Structure Analysis

Uploaded by

ndhlovulungile9
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Class example

GoT Limited has the following types of capital in their capital structure

Ordinary share class 1

This share has a share price of R200 per share, the risk-free rate is 6% and the return on the
market is 10%. GoT has a beta of 1.5. There are 10 000 CL 1 shares on issue

Ordinary share class 2

These shares have a Cost of 15% and recently declared a dividend on R12 per share. The
dividend is expected to grow at a rate of 9% per annum. There are 10 000 CL 2 shares in issue.

Loan

The company obtained a loan which is repayable over 5 years at R233 000 per year. A fair
market-related interest on his loan is 10% before tax.

Preference shares

10 000 non-redeemable preference shares issued with a face value of R200 and paying a
dividend of 10%. Similar shares yield 12%.

Required:

Calculate the costs and market value of each of the above components of GoT’s capital
structure

Calculate the WACC of GOT at market value

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