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The following particulars relate to ZPCL at the end of 2 0 1 0 : For its investment requirement at a project, the management of
The following particulars relate to ZPCL at the end of :
For its investment requirement at a project, the management of ZPCL finalized the following financial structure.
i Rs equity shares of Rs each. Present dividend per share is Rs; Market price Rs per share. Growth rate in dividend per cent.
ii Retained earnings Rs
iii Rs preference shares of Rs each issued at a discount of redeemable at the end of years.
iv Debentures of Rs each, repayable at par in were issued as follows:
Type A: Type A debenture of per cent issued at a premium of per cent.
Type B: Type B debentures of per cent issued at a premium of per cent.
v termloan of Rs for a period of years. ABC Ltd received the entire proceeds of the loan.
Assuming that Company is in a per cent tax bracket and that it uses book values as weights, calculate the overall cost of capital of ZPCLgive a stepwise solution to calculate cost of equity, cost of presference share, cost of retained earnings, cost of debentures, cost of term loan and then calculate the overall cost of capital
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