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Dear Sir
I am trying to find in your lectures and notes the calculation for the cost of preference shares for WACC calculations
It is exactly the same as the calculation of the cost of ordinary shares, except it is easier because preference shares have a constant dividend and therefore g = 0 !!
(I go through examples with preference shares in some of the lectures working through past exam questions.)
Thank you very much.
One more question, if WACC id requested such as in Fence (6/14), do we assume market value or book value if not specified?
We always calculate the WACC using market values (unless the question specifically says to use nominal (book) values, which is very unlikely indeed). The question Fence uses market values, which is correct.
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