微信扫一扫
实时资讯全掌握
| CLC Co CLC Co is a major manufacturer of sailing boats. In recent years earnings and dividends have grown by about 5% a year and the directors have publicly stated that they expect this growth to continue in the future. CLC have recently employed an Olympic medallist in windsurfing as the new sales and marketing director. He is keen to expand the range of products offered by CLC into areas such as land yachts and windsurfers and has come up with a number of proposals for investments to allow expansion into these areas. CLC existing capital structure is shown below:  Notes: 1 Ordinary $1 shares currently trading ex div at $1.18. A dividend has just been paid of $138,000. 2 10% bonds redeemable at par in 2 years time with a current market price of $100.00. 3 5% $1 preference shares, currently priced at $0.50 per share. 4 Business income tax is 30%. Required: (a) Calculate the weighted average cost of capital (WACC) for CLC and discuss whether this is an appropriate rate to use for the evaluation of the investments proposed by the sales and marketing director. (13 marks) |