Final answer:
The WACC of Serekunda Hospital Health Centre is $35 million.
Step-by-step explanation:
To calculate the Weighted Average Cost of Capital (WACC), we need to determine the cost of debt and the cost of equity. The cost of debt is found by multiplying the after-tax rate on debt by the amount of debt. In this case, the after-tax rate on debt is 7% and the debt amount is $150 million, so the cost of debt is $150 million x 7% = $10.5 million.
The cost of equity is found by multiplying the rate of common stock by the amount of common equity. In this case, the rate on common stock is 13% and the common equity amount is $350 million, so the cost of equity is $350 million x 13% = $45.5 million.
To calculate the WACC, we need to determine the weights of debt and equity. The weight of debt is the debt amount divided by the total capital amount, which is $150 million / $500 million = 0.3. The weight of equity is the equity amount divided by the total capital amount, which is $350 million / $500 million = 0.7.
Finally, we can calculate the WACC using the formula:
WACC = (Weight of Debt x Cost of Debt) + (Weight of Equity x Cost of Equity)
WACC = (0.3 x $10.5 million) + (0.7 x $45.5 million) = $3.15 million + $31.85 million = $35 million.