ABC Ltd. has the following capital structure as on 31st March 2019:

10% Debentures Rs. 6,00,000

9% Preference Shares Rs.4,00,000

Equity Shares (Rs. 100 each) Rs. 10,00,000

The Equity shares are quoted at Rs. 105 and the company is expected to declare a dividend of

Rs. 12 per share for the year ended 31st March 2019. Expected growth rate is 8%.

a. Assume that tax rate applicable to the company is 40%. Calculate Weighted Average Cost of

Capital.

b. The company wants to raise Additional Term Loan at 11% of Rs. 10,00,000 for expansion.

The Company's assessment is that, it will be able to pay dividend of Rs. 15 per share, but

market price per share will reduce to Rs. 98. The expected growth rate will remain the same.

Calculate the revised weighted average cost of capital.