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please answer as soon as possible as I have to upload it within an hour ABC Ltd. has the following book value capital structure as
please answer as soon as possible as I have to upload it within an hour
ABC Ltd. has the following book value capital structure as on March 31, 2013 Equity share capital (2,00,000 shares) Rs 40,00.000 11.5% preference shares Rs 10,00.000 10% debentures Rs 30,00.000 TOTAL: Rs 80,00.000 The equity share of the company sells for Rs 20. it is expected that the company will pay next year a dividend of Rs 2 per equity share, which is expected to grow at 5% p.a. forever. Assume a 35 corporate tax rate. Compute weighted average cost of capital (WACC) of the company based on the existing capital structure Maximum file size: 5MB, maximum number of files: 1 !!! + 4 at of MP Itd. needs Rs 20,00,000 for expansion. The expansion is expected to yield an annual EBIT of 16%. in choosing a financial plan, MP Itd has a objective of maximizing earnings per share. It is considering the possibility of issuing equity shares and raising debt of Rs 2,00,000 or R$8,00,000 or Rs 12,00,000. The current market price per share is Rs50 and is expected to drop to Rs 40 if the funds are borrowed in excess of rs 10,00,000. funds can be borrowed at the rates indicated below: a. Upto Rs 2,00,000 at 8% b. Over Rs 2,00,000 and upto Rs 10,00,000 at 12% c. Over Rs 10,00.000 at 18%. Assume tax rate of 40% Determine the EPS for the three financing alternatives Maximum file size: 5MB, maximum number of tiles: 1Step by Step Solution
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