Calculate the weighted average cost of capital when the capital structure shows: (a) Existing debt of Rs 5,00,000 at 10% for 6 years (tax rate is 30%); (b) New debt of Rs 3,00,000 at 8% for 10 years...


Calculate the weighted average cost of capital when the capital structure shows:



(a) Existing debt of Rs 5,00,000 at 10% for 6 years (tax rate is 30%);



(b) New debt of Rs 3,00,000 at 8% for 10 years with a floating cost of Rs 20,000;



(c) Preference shares Rs 1,00,000 (1000 shares) with 6% coupon rate;



(d) Existing equity shares (40,000 shares) with a market price of Rs 15 per share, EPS of Rs 4, growth rate of 5% and the dividend pay-out ratio of 50%; and



(e) Proposed equity shares (10,000 shares) to be sold at Rs 13, with Rs 20,000 as floatation cost.



May 05, 2022
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