The following figures are taken from the current balance sheet of Hamza & Co. Capital Rs. 10,00,000 Share premium 2,00,000 Reserves 6,00,000 Shareholders’ funds 18,00,000 12% irredeemable debentures 4,00,000 An annual ordinary dividend of Rs.3 per share has been just paid. In the past, ordinary dividend has grown at a rate of 10% annually and this rate of growth is expected to continue. Annual interest has recently been paid on debentures. The ordinary shares are currently quoted at Rs. 30 and the debentures at 80 percent. Ignore taxation. You are required to estimate the weighted average cost of capital (based on market values) for Hamza & Co.
1. The following figures are taken from the current
Capital Rs. 10,00,000
Share premium 2,00,000 Reserves 6,00,000
Shareholders’ funds 18,00,000
12% irredeemable debentures 4,00,000
An annual ordinary dividend of Rs.3 per share has been just paid. In the past, ordinary dividend has grown at a rate of 10% annually and this rate of growth is expected to continue. Annual interest has recently been paid on debentures. The ordinary shares are currently quoted at Rs. 30 and the debentures at 80 percent. Ignore
You are required to estimate the weighted average cost of capital (based on market values) for Hamza & Co.
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