Financial Management Question. QUESTION ONE You are provided with the following information relating to V ltd Equity and liabilities 12% debentures (shs1000 at par) 16,000 10% preferences shares 6,250...

Financial Management Question.

QUESTION   ONE

1. You are provided with the following information relating to V ltd

Equity and liabilities

12% debentures (shs1000 at par)                    16,000

10% preferences shares                                      6,250

Ordinary shares (Shs 10 par)                            12,500

Retained earnings                                             28,125

Additional information

1. The debentures are currently selling at Shs 950 in the market


2. Company paid a dividend of Shs 5.00 per ordinary share and they are expected to grow at a rate of 10% per annum.


3. The corporation tax is 40%

Required

Effective Cost of debt

Cost of equity

Weighted Average cost of capital