Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The common stock of Mobility Inc. is currently trading at Rs. 25 per share. The company has paid a dividend of Rs. 1.44 per share

The common stock of Mobility Inc. is currently trading at Rs. 25 per share. The company has paid a dividend of Rs. 1.44 per share in this year and is planning to distribute a dividend of 12% more than this year. The company expects a growth rate of 12%. The company also has some preference equity shares with the face value of Rs. 100 per share and 9.75% fixed dividend each year. Currently, each preference share is trading at Rs. 80. Further, the companys debt breakup is as follows:

Bank loan of 10 crore @ 13% interest

15 crore as debt from Mindisfresh Ltd. @ 6% interest rate

3 crore from an ex-partner in the company @ 10% interest rate

2 crore through bonds @ 5% interest rate

The breakup of the difference sources of capital is as follows:

Source

Proportion

Ordinary equity

40%

Preference equity

20%

Debt

40%

Total

100%

Based on the information provided, what is the companys weighted average cost of capital

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Kamishibai Boards A Lean Visual Management System That Supports Layered Audits

Authors: Joseph Niederstadt

1st Edition

1482205297, 978-1482205299

More Books

Students also viewed these Accounting questions