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A company issues 10,000 equity shares of Rs. 100 each at a premium of 10%. The company has been paying 25% dividend to equity shareholders

A company issues 10,000 equity shares of Rs. 100 each at a premium of 10%. The

company has been paying 25% dividend to equity shareholders for the past five years and

expects to maintain the same in the future also. Compute the cost of equity capital. Will it

make any difference if the market price of equity share is Rs. 175?

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