Capital structure of a company includes the following: (i) Equity share capital: 7,00,000 shares of face

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Capital structure of a company includes the following:

(i) Equity share capital: 7,00,000 shares of face value ₹10 each 

(ii) Preference shares capital: 20,000, 12% shares of face value ₹100 each 

(iii) Debt of ₹30,00,000 bearing a coupon rate of 15%

During the year, the company earned EAT of ₹15,00,000. The equity capitalization rate for this risk category of the company is 20% and the returns expected by preference shareholder are 10%, whereas return expected by debt holders are 18%. Calculate the value of company.

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Financial Accounting

ISBN: 9780071078023

1st Edition

Authors: Dhanesh K. Khatri

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