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1. (a) Calculate the cost of capital in the following cases : (i) A Ltd. issues 12% debentures of face value Rs. 100 each and
1. (a) Calculate the cost of capital in the following cases : (i) A 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%. (ii) B Ltd. issues preference shares of face value Rs. 100 each carrying 14% dividend and he realizes 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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