Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Determine the wighted average cost of capital using ( 1 ) Book value weights and ( 2 ) market value weights based on the following

Determine the wighted average cost of capital using (1) Book value weights and (2)market value weights based on the following information Book Value Structure Debenture ( Rs100 per Debenture ) Rs 800,000 Prefernce Shares ( RS 100 per share ) RS 200,000 Equity Shares (10 per share ) RS 1000,000 Total 20,00,000 Recent market prices of all these securities are debentures 110 per debenture,prefernce shares , Equity shares 22 per share .1) RS 100per Debenture redeemable at par ,10 year maturity ,13%coupen, 4% roatation cost and sale prices Rs 1002) Rs 100 per prefernce share redeemable at par ,10 year maturity ,14% dividend rate ,5% floation cost and sales price Rs 100.3) Equity shares Rs 2per share floation costs and sales prices Rs 22.Dividend expected on equity shares at the end of the year is RS 2per share anticpated growth rate and dividends is 7% company pays all its earning in the form of divedends .corporate tax rate is 30%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Personal Finance

Authors: Jack Kapoor, Les Dlabay, Robert J. Hughes

11th International Edition

1259094901, 9781259094903

More Books

Students also viewed these Finance questions

Question

Explain why having a minimum voting age may cause rent-seeking.

Answered: 1 week ago

Question

4. Discuss t he role of SCM in e-business and e-commerce.

Answered: 1 week ago

Question

a. Did you express your anger verbally? Physically?

Answered: 1 week ago