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DN Realities Pvt . Ltd . has the following Capital Structure: Market Price per Equity Share is Rs . 5 0 . The next expected

DN Realities Pvt. Ltd. has the following Capital Structure: Market Price per Equity Share is Rs.50. The next expected Dividend per Share is Rs.5 and the Dividend is expected to grow at 8%. The Preference Shares are redeemable after 7 years at Par and are currently quoted at Rs.75 per share in the stock exchange. The debentures are redeemable after 6 years at Par and their current Market Quotation is Rs.90 per debenture. The tax rate applicable to the firm is 50%.
Calculate:
a) Cost of Equity Capital
b) Cost of Debenture Capital
c) Cost of Retained Earnings
d) Cost of Term Loan
e) Cost of Preference Capital
f) Weighted Average Cost of Capital (WACC)
g) What is the relationship between the Cost of Capital and the Value of a firm

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