1. From the following capital structure of a company calculate the overall cost of capital using (a) Book value weights and (b) Market value weights

(b) Computation of Weighted Average Cost of Capital

[Market value weights] Source Amount After tax Cost Total after tax $

(1) (2)$ (3) Cost (4) = (2) x (3)

Equity share capital 90,000 14% 12,600

Preference share capital 10,000 10% 1,000

Debentures 30,000 5% 1,500