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Samco Ltd is currently having following capital structure - Equity Capital (1 lakh shares at par value 10/) - 12% Preference Capital (10,000 shares at

image text in transcribed Samco Ltd is currently having following capital structure - Equity Capital (1 lakh shares at par value 10/) - 12% Preference Capital (10,000 shares at par value 100/) - 15\% Debentures, Non-Convertible (70,000 debenture) Face Value 100/ - The 12% redeemable preference shares after 8 year issued at par (face value-100) and are currently priced at .90 per share. Beta of Samco Ltd is 1.2 and Nifty is giving returns of 12% p.a , Government securities return are 7% p.a. 15% debentures are redeemable after 5 year at par and their current market price is 90 per share. The tax rate applicable to the firm is 50 percent. Samco Ltd wants to evaluate the cost of capital currently and accordingly further can be planned to raise. As financial manager, how would you calculate following: Using above information, calculate 1. Cost of Equity using Capital asset Pricing Model 2. After tax cost of Debt 3. Cost of preference shares Weighted average cost of capital

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