Question
Q#4( 08 ) The following balances appear in the balance sheet of HASF ltd Equity shares of RS 5 each 800,000 10% Pref. Shares of
Q#4( 08 ) The following balances appear in the balance sheet of HASF ltd
Equity shares of RS 5 each 800,000
10% Pref. Shares of RS 10 each 500,000
Retained earning 600,000
12% Debentures 1,000,000
The company is expected to earn an ebit of 900,000 annually and the tax rate is 40% the current market prices of the equity and preference shares are RS.12.50 and 8 respectively. However, the debentures are being traded at par. Find out the cost of debentures, cost of retained earnings. cost of preference share, cost of common equity and Weight average cost of capital
Other information
Growth rate 10 %
Flotation cost 10%
Rate of dividends on common stock 10%
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started