ACCA P4 Revision Mock – Questions _D11

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    lhs123
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    Q1

    “…financially, the firm is in a very strong position, being mainly equity financed except for a
    £5m (Nominal Value), 4% coupon debenture loan which is redeemable at a 10% premium in
    3 years…our target gearing level is 20% debt and 80% equity.”
    Design industry data:
    Average P/E ratio is 15, and average expected equity investor returns are 14% p.a.
    UK Corporation Tax rate = 30%. Return on UK Treasury Bills = 5% p.a.

    i want to how to caclute the cost of debt?


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    lhs123
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    i want to how to caclute the cost of debt?

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