Calculate the WACC for STARS Ltd?

Answers:3   |   LastUpdateAt:2017-09-15 17:52:18  

Question
Geraldine
Asked at 2012-08-06 04:42:47
Stars Ltd is a subsidiary of a South African company operating in Europe . They are considering new capital projects in Europe. They are unfamiliar with Group Policy and European general manager asked the manager of the Financial Group to determine the WACC of the company in Europe.The data for the calculation is as follows :

Corporate tax rate in the European country is 22% .

equity
Total equity has been valued by an independent appraiser in good standing at Euro 1 000 25 000 000.There are stock in trade emission counter . The appraiser also determines the total cost of equity by 8 % annually.

World Bank loan
In order to help the ailing U.S. economy , the World Bank provided low-interest loans at 3 % interest to a number of companies, including stars . Due to the low rate , the company is to avoid repayments, as much as they can and the balance due is EUR 250 000.

Debentures
The current pre-tax performance of loans in the same risk class is 5.00 %. The last operation was at Euro 93 per voucher and 5 000 has been issued.

Private
unsecured revolving credit As part of working capital revolving credit facility of a wealthy businessman has been secured. Expensive debt by 9 %, and the company that used in emergencies only. Only EURO 55 000 is arranged .

Required :
Calculate WACC STARS Ltd
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