You are given the following information for Barbican Bank Ltd a banking firm: The company has a beta of 1.5% and the FTSE/JSE banks index return is 8.5%. If the Treasury bill rate is currently paying 6.25%, what is the required rate of return for Barbican Bank Ltd?
Use the information for Zola Ltd below to calculate the company’s weighted cost of capital.
Weight
Ordinary share capital 60%
Preference share capital 10%
Debt 30%
Return Information
Beta 1.25
Industry return 9%
Risk free rate 6.25
Tax rate 28%
Preference share return 10%
Pre-tax Debt return 7.5%