5. The Capital Structure and other information of a company are given as follows: Sources Amount (in

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5. The Capital Structure and other information of a company are given as follows:

Sources Amount (in lakh) After-tax Cost of Capital (%)

Equity Shares (`100 each) 100 14 Reserve and Surplus 50 ?

Debentures 200 ?

The market value of equity share is `300 per share. The company uses market value of weights for computing average cost of capital. Corporate tax rate is 40% whereas the average Cost of Capital is 10%.

What is the cost of reserve and surplus and cost of debt (before tax)?

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Financial Management

ISBN: 9789352605606

1st Edition

Authors: Swapan Sarkar, Bappaditya Biswas, Samyabrata Das, Ashish Kumar Sana

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Question Posted: Jul 23, 2024 07:01 AM

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5. The Capital Structure and other information of a company are given as follows: Sources Amount (in

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Financial Management

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