cp india ltd has the following capital structure, which it considers optimal: debt 25% preference shares 15% equity shares 60% total 100% applicable tax rate for cpil is 25%. and investors expect...

cp india ltd has the following capital structure, which it considers optimal: debt 25% preference shares 15% equity shares 60% total 100% applicable tax rate for cpil is 25%. and investors expect earnings and dividends to grow at a constant rate of 9% in the future. risk free rate of return is 6%, average equity share has expected rate of return of 15%. cpil’s beta is 1.50. following terms would apply to new securities being issued as follows: 1. new preference can be issued at a face value of rs. 100 per share, dividend and cost of issuance will be rs. 8 per share and rs. 4 per share respectively. 2. debt will bear an interest rate of 10%. calculate a. component cost of debt, preference shares and equity shares assuming that cpil does not issue any additional equity shares.