Question
A company has on its books the following amounts and specific costs of each type of capital. Type of Capital Book Value Rs. Market Value
A company has on its books the following amounts and specific costs of each type of capital.
| Type of Capital | Book Value Rs. | Market Value Rs. | Specific Costs (%) |
| Debt | 4,00,000 | 3,80,000 | 5 |
| Preference | 1,00,00 | 1,10,00 | 6 |
| Equity | 6,00,00 | 9,00,000 | 15 |
| Retained Earning | 2,00,00 | 3,00,000 | 13 |
|
|
|
|
|
|
| 13,00,000 | 16,90,00 |
|
Determine the weighted average cost of capital using:
(a) Book value weights, and
(b) Market value weights.
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How To Analyse Bank Financial Statements
Authors: Thomas Padberg
1st Edition
0857195182, 978-0857195180
