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Portrush Co's capital structure is as follows:
The bonds are redeemable at par in 2010. The current market for the company's securities are: $1 ordinary shares 160p and the 12% bonds 2010, $100. The company is paying tax at the rate of 30%. The cost of the company's equity has been estimated at 16% per annum. What is the company's weighted average cost of capital for capital investment appraisal purposes? A. 14.86% B. 14.48% C. 15.20% D. 13.83% |