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assumptions on which your calculations are based Calculating cost of capital |LO 5] Rydstone Ld has commenced operations with the following capital puchure: Rylstone lid
assumptions on which your calculations are based Calculating cost of capital |LO 5] Rydstone Ld has commenced operations with the following capital puchure: Rylstone lid statement of financial position as at date of incorporation 1000000 Assets Sundry assets Liabilities and shareholders' funds Debentures, 8% (10 years) Preference shares, 9% Ordinary shares, issued and paid-up, 500000 at $1 300000 200000 500000 1000000 The company's prospectus contains estimates that it will earn $100000 in the first year and pay dividends of 10 cents per share. Brokers anticipate that dividends will grow at 5 per cent per annum. The shares are currently selling at $1. The statutory company income tax rate is 30 cents in the dollar and the proportion of the tax collected from the company that is claimed by shareholders is 0.60. Calculate the cost of capital for Rylstone Lid
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