Question 5 [20]Lifestyle Foods Ltd is a leading producer of canned

Question 5 [20]Lifestyle Foods Ltd is a leading producer of canned foods. The executive committee (EXCO)is considering expanding one of its production facilities and needs to weigh its financing optionsfor this project carefully because the industry is very competitive and profit margins are quitelow.As a first step in the assessment of this project, the EXCO wants to know the weighted averagecost of capital (WACC) of the company. The chairperson of the EXCO has tasked you with thisresponsibility.The following information is available to you:Source of capitalRandOrdinary shares issued (2 000 000 shares)8 000 000Retained earnings1 000 00012% preference shares4 000 000Long-term loan5 000 00018 000 000The company recently paid a dividend of R3.40 per share and according to the annualshareholders’ report, the company expects future dividend growth to be 4%. Preference sharesare convertible. The long-term loan matures 10 years from today and carries an interest rateof 15.72% per annum. The corporate tax rate is 30%.Required:Round off all calculations to the nearest whole number.5.1. Calculate Lifestyle’s WACC at the current market value.(13)5.2.The EXCO has set the company’s target debt:equity ratio as 40% debentures, 15%preference shares and 45% equity. Use these ratios to calculate the WACC at targetratios.(7)SBSPage 7 of Assignmentthorn Business Scho

Show more

Calculate Your Essay Price
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more