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The following information is available with respect to a company: Source Amount Cost of capital Equity share capital (2,00,000 shares of Rs 10 each)
The following information is available with respect to a company: Source Amount Cost of capital Equity share capital (2,00,000 shares of Rs 10 each) 20,00,000 11% Preference share capital (50,000 shares of Rs 10 each) 5,00,000 8% Retained earnings 10,00,000 7.5% Debentures of Rs 100 each 15,00,000 4.5% Presently the debentures are trading at Rs 94, preference shares at par and equity shares at Rs 13/share. Calculate WACC using: (a) Book value weights; (b) Market value weights. The applicable tax rate is 30%.
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