24. A company has the following capital in its balance sheet: (a) 12-year, 12 per cent secured...
Question:
24. A company has the following capital in its balance sheet:
(a) 12-year, 12 per cent secured debentures of *1,000 each; principal amount *50 crore (10 million crore); the required rate of return (on debentures of similar risk) 10 per cent;
(b) 10-year, 14 per cent unsecured debentures of 1,000 each; principal amount 30 crore; interest payable half-yearly; the required rate of return 12 per cent;
(c) preference share of *100 each; preference dividend rate of 15 per cent; principal amount 100 crore; required rate of return 13.5 per cent; and
(d) ordinary share capital of *200 crore at 100 each share; expected dividend next year, 12; perpetual dividend growth rate 8 per cent; the required rate of return 15 per cent. Calculate the market values of all securities.
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