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XYZ, a Telecom Company, has the following capital structure, which is considered to be optimal: During this tax year, company is liable to pay tax
XYZ, a Telecom Company, has the following capital structure, which is considered to be optimal: During this tax year, company is liable to pay tax @ 35%, and investors are expecting that earnings and dividends will grow at a constant rate of 10%. Current year's dividend is Rs. 4 per share and the common stocks are selling at Rs. 60 per share. XYZ can obtain new capital in the following ways: Preferred stock New preferred stock With a dividend of Rs. 15 can be sold to the public at a price of Rs. 97 per share. Debentures: Debentures can be sold at an interest rate of 13%. Determine the cost of each capital structure component and Calculate the weighted average cost of capital
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