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A firm has the market price of Rs. 38. A constant expected annual growth rate of 6% and a dividend of Rs. 2.50 per share has been paid at the beginning of the current year. Calculate the weighted average cost of capital, if it has the following capital structure and after-tax costs for the different sources of funds used: Sources of Funds Amount After-tax cost Rs. % 20,00,000 Preference Shares 25,00,000 Debt 6.5 10 30,00,000 Retained Earnings 25,00,000 100,00,000 Equity Shares To be calculated 14 Total

A firm has the market price of Rs. 38. A constant expected annual growth rate of 6% and a dividend of Rs. 2.50 per share has been paid at the beginning of the current year. Calculate the weighted average cost of capital, if it has the following capital structure and after-tax costs for the different sources of funds used: Sources of Funds Amount After-tax cost Rs. % 20,00,000 Preference Shares 25,00,000 Debt 6.5 10 30,00,000 Retained Earnings 25,00,000 100,00,000 Equity Shares To be calculated 14 Total

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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A firm has the market price of Rs. 38. A constant expected annual growth rate of 6% and a dividend of Rs. 2.50 per share has been paid at the beginning of the current year. Calculate the weighted average cost of capital, if it has the following capital structure and after-tax costs for the different sources of funds used: Sources of Funds Amount After-tax cost Rs. % Debt 20,00,000 6.5 Preference Shares 25,00,000 10 Equity Shares Retained Earnings 25,00,000 30,00,000 To be calculated 14 Total 100,00,000
Transcribed Image Text:A firm has the market price of Rs. 38. A constant expected annual growth rate of 6% and a dividend of Rs. 2.50 per share has been paid at the beginning of the current year. Calculate the weighted average cost of capital, if it has the following capital structure and after-tax costs for the different sources of funds used: Sources of Funds Amount After-tax cost Rs. % Debt 20,00,000 6.5 Preference Shares 25,00,000 10 Equity Shares Retained Earnings 25,00,000 30,00,000 To be calculated 14 Total 100,00,000
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