Question
Illustration 14.23 KLM Turnkey Ltd., has an operating profit of Rs. 40,00,000 and has employed Debt (Total Interest Charge of Rs. 10,00,000). The existing
Illustration 14.23 KLM Turnkey Ltd., has an operating profit of Rs. 40,00,000 and has employed Debt (Total Interest Charge of Rs. 10,00,000). The existing Cost of equity and Cost of Debt to the firm are 18% and 12% respectively. The firm has a proposal before it requiring funds of Rs. 100 lacs (to be raised by issue of additional debt) which is expected to bring additional profit of Rs. 20,00,000. Find out the existing WACC and the new WACC. Assume no Tax. Solution:
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Intermediate Accounting
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield.
9th Canadian Edition, Volume 2
470964731, 978-0470964736, 978-0470161012
