Q 1. (a) (i) A 10 year preference share of face value INR 500 has been floated by Martial Munich Ltd. The firm confirms to pay a dividend of 12 percent to be calculated on a quarterly basis. The preference share is redeemable at a premium of INR 20 percent. You are required to calculate the present value of this preference share if an investors required rate of return is 16 percent.

Also, at what required rate of return of the investor, will the present value of all the future inflows be equivalent to the cash outflow?