1. Consider the following information: You have been given the task of determining the WACC after tax of the firm Al-Ala

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1. Consider the following information: You have been given the
task of determining the WACC after tax of the firm Al-Alawal. You
are told that the firm has used the following securities to finance
its operations. • Four hundred thousand (400,000) ordinary shares,
issued at a par value of $1.50. The beta of Al-Alawal is 1.5, the
risk-free rate is currently 4% per annum, and the expected return
on the market is 10% per annum. Al-Alawal is expected to pay a
dividend of 10 cents per share next year, and has an expected
growth rate of 8% per annum. • An overdraft of $300,000. The
current interest rate on the overdraft is 9.5% per annum with
interest calculated on a monthly basis. • Debentures with four
years to maturity. The debentures offer a coupon of 8% per annum,
paid half yearly, (the coupon is calculated on the face value). The
face value of the debentures is $300,000, and the current market
interest rate for these securities is 10% per annum, calculated
half yearly. • A zero-coupon bond with face value of $150,000, the
current market value of the zero-coupon bond is $73,790.06. Assume
interest is calculated on the bond on a quarterly basis. The bond
will mature in six years’ time. • Tax is 33% per annum.