Calculate the cost of capital in the following cases: i) ii) X Ltd. issues 12% Debentures...
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Calculate the cost of capital in the following cases: i) ii) X Ltd. issues 12% Debentures of face value Rs. 100 each and realizes Rs. 95 per Debenture. The Debentures are redeemable after 10 years at a premium of 10%. Y. Ltd. issues 14% preference shares of face value Rs. 100 each Rs. 92 per share. The shares are repayable after 12 years at par. Note: Both companies are paying income tax at 50%. Calculate the cost of capital in the following cases: i) ii) X Ltd. issues 12% Debentures of face value Rs. 100 each and realizes Rs. 95 per Debenture. The Debentures are redeemable after 10 years at a premium of 10%. Y. Ltd. issues 14% preference shares of face value Rs. 100 each Rs. 92 per share. The shares are repayable after 12 years at par. Note: Both companies are paying income tax at 50%.
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i For calculating the cost of capital for X Ltd we need to first calculate the cost of debt Cost of ... View the full answer
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