Assessing cost of capital of Aust Capital Supplies
Added on 2020-06-03
9 Pages1027 Words44 Views
Professional Report
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3PART 1............................................................................................................................................3Assessing cost of capital of Aust Capital Supplies......................................................................3PART 2............................................................................................................................................5Assessing cost of capital of Aust Capital Supplies......................................................................5PART 3............................................................................................................................................6Determining whether company should undertake the replacement or not..................................6CONCLUSION................................................................................................................................9REFERENCES..............................................................................................................................10
INTRODUCTION Corporate finance is one of the main areas that assist in dealing with the sources offunding and capital structure. Such field of finance enables manager to take appropriate actionsthat maximizes shareholder’s wealth. The present report is based on Aust Defence Supplies Inc.that offers low technology products for defense forces, camping and hiking leisure market. It islisted on the recognized stock exchange of Australia such ASX. In this, report will shed light onthe cost of capital of Aust supplies. Besides this, it will provide in-depth insight about the extentto which replacement project will be viable. Further, it also entails that whether company shouldselect bid option or not. PART 1Assessing cost of capital of Aust Capital SuppliesCost of shares = dividend per share / Current market value of stock + Growth rate ofdividends (Cost of Equity, 2017)Cost of ordinary share capital Particulars Figures DPS 4.34Current market value 53.25Growth rate ofdividend 0.102Growth rate individend 0.1241Ke18.35%Cost of preferred stockParticulars Figures DPS 12.1Current market value 97.5Growth rate ofdividend 0.102
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