100%. Q2: Mayank Plastics Ltd. wants to enter into the arena of plastic moulds next year for which it requires Rs. 20Cr. to purchase new equipment. The CFO has made available the following details based on which you are required to compute the weighted marginal cost of capital. The amount required will be raised in equal proportions through debt and equity (new issue and retained earnings put together account for 50% ). The company expects to earn Rs.4Cr as profits by the end of year of which it will retain 50% and pay off the rest to the shareholders. The debt will be raised equally from two sources-loans from IOB costing 14% and from the IDBI costing 15%. The current market price per equit share is rs. 24 and dividend payout one year hence is rs. 2.40.

Tax rate is 50 %

Compute the marginal cost of capital