c From the following capital structure of a company, calculate the overall cost of capital (a) Book Value weights (b) Market Value Weights. 10 Source Equity Share Capital Book Value 45000 Market value 90000 (Rs 10/- per share) Retained Earnings Preference shares capital Debentures 15000 10000 30000 NIL 10000 30000 The after tax cost of different sources of finance is as follows: Equity share capital: 14%, Retained earnings: 13%, Preference share capital: 10%, Debentures: 5%. Payoff Ltd.is producing articles mostly by manual labor and is considering to replace it by a new machine. There are two alternative models M and N of new machine. prepare a statement of profitability showing the pay-back period from the following information: Particulars 5 Estimated life of machines Cost of machine Estimated savings in scrap Estimated savings in direct wages Additional cost of Maintenance Additional cost of supervision Ignore taxation. Machine M 4years 9000 Machine N 5 years 18000 500 800 6000 8000 800 1000 1200 1800 b ABC ltd is proposing to take up a project which will need an investment of Rs 80,000. The net income before depreciation and tax is estimated as follows: Depreciation is to be charged according to the SLM. Tax rate is 50%. Calculate ARR on original investment. Year 1 Net income before 20000 2 24.000 28,000 3 4 5 30,000 32000 depreciation and tax 5