4. The capital structure of ABC Itd in book value terms is as follows: Equity capital(20 million shares, Rs 10/- par) Rs 200 million Preference capital, 12% (500,000 shares at Rs 100 par) Rs 50 million Retained earnings Rs 350 million Debentures 14% (1.200.000 dcbentures, Rs 100 par) Rs 120 million Term loans 13 % p.a. Rs 80 million Total Rs 800 million The next expected dividend per share is Rs 2.00. The dividend per share is expected to grow Page 2 of 3 At the rate of 12 per cent. The market price per share is Rs 50/-. Preference stock, redeemable after 10 years, is currently selling for Rs 85 per sharo. Debentures, redeemable after 5 years, are selling for Rs 90/- per debenture. The tax rate for the company is 30 per cent. Calculate the average cost of capital. (15)