Determine the weighted average cost of capital using :

Book value weights and

Market value weights based on the following information :

Book Value Structure

Recent Market prices of all these securities are Debentures: Rs$.110$ per Debenture

Preference shares : Equity share :$22$ per share

External financing opportunities are :

i$)$ Rs$.100$ per Debenture redeemable at par, $10$ year maturity, $13\%$ coupon, $4\%$ flotation cost, and

sale price Rs$.100$

ii$)$ Rs$.100$ per Preference Share redeemable at par, $10$ year maturity. $14\%$ dividend rate,

$5\%$ flotation cost, and sale price Rs$.100$

iii$)$ Equity shares : Rs $2$ per share flotation costs and sale price Rs$.22$

Dividend expected on equity shares at the end of the year is Rs$.2$ per share, anticipated growth rate in

dividends is $7\%.$ Company pays all its earnings in the form of dividends. Corporate tax rate is $30\%$