Q-3 (A) A company has the following book value capital structure. Sources of Capital Equity Capital (10 million shares, Rs.10 par) Reserves & Surplus MFT4CCEF04 9% Preference Capital (0.8 million shares, Rs. 100 par) 11% Debentures (2 million debentures, 100 200 Million par) Company's target capital structure is as follows: Equity Capital Preference Capital Debt Book (Rupees) 100 Million 150 Million 80 Million 60% 10% 30% The risk-free rate is 6.5%, the market risk premium is 6% and the company's beta is 1.2. The market price per share is Rs. 40. Preference shares redeemable after 10 years are selling for Rs. 90. Debentures redeemable after 4 years are selling for Rs. 104. The effective tax rate for the company is 30%. Value Calculate the Weighted Average Cost of Capital of the company (10) based on the market values.