Calculate form the foregoing data the cost of equity capital and WACC. b. If company raises additional debentures for Rs. 3 lacs at 12 % calculate the revised WACC if change are: increase in dividend rate from 10 to 12 % Reduction in growth rate from 10 to 8 % and fall in market price of share from Rs. 102 to 98.
24. Company has the following capital structure as on December 31,1995.
11% Debentures 5,00,000
10% Pfef.Shares 1,00,000
4,000 equity shares of 4,00,000 Rs. 100 each
Total 10,00,000
Equity shares are quoted at Rs. 102 and is is expected that the company will
declare a dividend of Rs. 10/- per share at the end of the current year. The
dividend is expected to grow at 10 % for the next five years. The companies
tax rate is 50 %.
a. Calculate form the foregoing data the
b. If company raises additional debentures for Rs. 3 lacs at 12 % calculate the
revised WACC if change are:
increase in
to 8 % and fall in market price of share from Rs. 102 to 98.
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