B7AF100 Question 4 JustDidit plc runs a chain of Triathlon accessory stores throughout the EU. The following information

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B7af100 Question 4 Justdidit Plc Runs A Chain Of Triathlon Accessory Stores Throughout The Eu The Following Information 1 (77.67 KiB) Viewed 21 times

B7AF100 Question 4 JustDidit plc runs a chain of Triathlon accessory stores throughout the EU. The following information is available from JustDidit plc's balance sheet as of 30th April 2022. Corporation tax rates of 25% apply to JustDidit plc. Statement of Financial Position (Extract) Equity & Liabilities Ordinary Share Capital (€0.70) Retained Earnings € 1,400,000 500,000 Non-Current Liabilities 6% Bonds 7% Preference Shares 1,400,000 1,200,000 Additional information i. ii. JustDidit plc has €0.70 ordinary shares which are currently being traded at €3.60 and shareholders expect a 11% return. JustDidit plc uses market value for both debt and equity. The 6% bond (€1,000 par) is redeemable in 2 years and is currently trading at a premium of 24% Preference shares originally had a €0.65 nominal share and are currently trading at €1.45. iii. iv. Required: a) Calculate the Weighted Average Cost of Capital (WACC) for JustDidit plc. (14 marks) b) If JustDidit wished to raise new term-long finance, recommend specific options available, giving reasons for your answer. (4 marks) c) Give TWO reasons when it is appropriate for an organisation to use WACC as the discount factor for investment appraisal. (2 marks) (Total 20 marks)