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You are GM finance of National Engineering Ltd. The company's current capital structure is: Rs million 10% Bonds (Rs 100each) 20000 10000 10000 15 %Preference
You are GM finance of National Engineering Ltd. The company's current capital structure is: Rs million 10% Bonds (Rs 100each) 20000 10000 10000 15 %Preference shares (Rs 10per share) Ordinary shares (Rs 10 par value) Retained earning 5000 The company's beta is 1.5. The market yield rate is 15% and risk free rate is 5%. Market price of bond is Rs 105. Bond is redeemable at its par value of Rs100 after 5 years. Preference shares are irredeemable and are trading at Rs 9 per share. Find weighted average cost of capital by using market value based weights. Find weighted average cost of capital by using market value based weights
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