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The Kay Company has the following Capital structure as at 31 st March, 2019. Based on Book Value Based on Market Value % Costs Debentures300,000

The Kay Company has the following Capital structure as at 31^st March, 2019.

Based on Book Value Based on Market Value% Costs

Debentures300,000 330,0007

Preference 100,000110,0009

Equity1,500,0001,700,00015

Debt200,000180,00010

Required :

Determine the Weighted Average cost of capital using :

a)Book Value weights

b)Market Value weights

c)What are the factors affecting Cost of Capital ?

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