QUESTION B2 Mori PLC has in issue 1,000 bonds which mature in 4 years' time. The bond's par value is £1,000 each and it pays 8% interest per year. The cost of debt is 9%. The company has just paid a...

Extracted text: QUESTION B2 Mori PLC has in issue 1,000 bonds which mature in 4 years' time. The bond's par value is £1,000 each and it pays 8% interest per year. The cost of debt is 9%. The company has just paid a dividend of £1.2 per share. Dividends are expected to grow at 4% for a foreseeable future. The company has 1 million shares outstanding, at nominal value of £1 per share. The cost of equity is 14%. The marginal tax rate is 35%. Required: a) Estimate the total market value of the bonds in issue. b) Estimate the total market value of the outstanding shares. c) Calculate the weighted average cost of capital.