PT Toys is a company engaged in the children’s toy industry. This year, PT Toys plans to increase its sales

Question:

PT Toys is a company engaged in the children’s toy industry. This year, PT Toys plans to increase its sales overseas. To realize this plan, PT Toys must have a large enough capital.

To get the capital, PT Toys has done the following ways: . PT Toys borrowed Rp. 3,000,000,000 from Bank Global with an interest rate of 1% pa.

PT Toys issued 10,000 bonds with a nominal value of IDR 100,000 per share, where the current market price of the bonds is 10% higher than the nominal value.

The bonds have a term of 10 years. PT Toys provides a 10% coupon to its bondholders.

PT Toys issued 20,000 shares of common stock with a nominal value of IDR 25,000 per share, where the market price of ordinary shares is 5% greater than their par value. The final total dividend given by PT Toys to its shareholders was IDR 5,000,000,000 and the growth rate of the common stock is constant from year to year, namely 10%.

Question : Calculate the weighted average cost of capital for PT Toys at the current tax rate of 30%.

Expert Answer:

Answer rating: 100% (QA)

To calculate the weighted average cost of capital WACC for PT Toys we need to consider the cost of d

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