Waec Model Questions Vol1 2022 Commerce Question 24
Practice objective / multiple choice question 24 from the 2022 Waec Model Questions Vol1 Commerce examination.
A listed company has the following capital structure: ordinary equity - 5 million shares at a market price of ₦250 each; preference shares - 200,000 shares paying a dividend of ₦15 per share, market price ₦180; long‑term debt - ₦300 million with a yield of 9 % per annum. The corporate tax rate is 30 %. The firm plans to issue an additional 500,000 ordinary shares at a subscription price of ₦240 per share and use the proceeds to retire an equivalent amount of long‑term debt. Using the CAPM (risk‑free rate 8 %, market risk premium 6 %, beta 1.2) to estimate the cost of equity, calculate the new weighted average cost of capital (WACC) after the financing change.
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This is Waec Model Questions Vol1 2022 Commerce Question 24. It is one of the objective questions from the 2022 Waec Model Questions Vol1 Commerce examination.
Difficulty level: Hard .
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