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Q . 2 . XYZ Ltd has the following book value capital structure ( Rs Crore ) table [ [ Equity capital ( Rs

Q.2. XYZ Ltd has the following book value capital structure (Rs Crore)
\table[[Equity capital (Rs 10 each, fully paid up-at par),Rs 15],[12% preference capital (Rs 100 each, fully paid up-at par),1],[Retained earnings,20],[11.5% Debenture (Rs 100 each),10],[11% Term loan,12.5]]
The next expected dividend on equity shares per share is Rs 3.60 ; the dividend per share is expected to grow at the rate of 7 percent. The market price per share is Rs 40. Preference stock, redeemable after 10 years, is currently selling at Rs 75 per share.
Debentures redeemable after 6 years, are selling at Rs 80 per debenture.
The income tax rate for the company is 40 percent.
Calculate the weighted average cost of capital by using the market value weights. (10
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