• Siva Ltd., issues 8000 8% debentures for Rs. 100 each at a discount of 5%. The commission payable to underwriters and brokers is Rs. 40000. The debentures are redeemable after 5 years. Compute the after tax cost of debt assuming a tax rate of 60%.

• Bharathi Ltd., issues 4000 12% preference shares of Rs. 100 each at a discount of 5%. Costs of raising capital are Rs. 8000. Compute the cost of preference capital.

• Firm pays tax at 60%. Compute the after tax cost of capital of a preferred share sold at Rs. 100 with a 8%. Dividend and a redemption price of Rs.110, if the company redeems in five years.