Question
The following information is available for ABC Ltd Particulars Rs in million Net operating income(NOI) Rs 40 Interest on debt Rs 10 Cost of equity(Ke)
The following information is available for ABC Ltd Particulars Rs in million Net operating income(NOI) Rs 40 Interest on debt Rs 10 Cost of equity(Ke) 0.18 Cost of debt(Kd) 0.12
(a) What is the average cost of capital of ABC Ltd. (b) What happens to the average cost of capital of ABC Ltd,if it employs Rs 100 million of debt to finance a project which earns an operating income RS 20 million.Assume that the net operating income(NOI) method applies and there are no taxes.
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Personal Financial Planning
Authors: Lawrence J. Gitman, Michael D. Joehnk, Randy Billingsley
13th edition
1111971633, 978-1111971632
