Q.2 The following is the capital Structure of Maruti Itd. Sources of capital Book value Market value Rs. 40,00,000 10,00,000 30,00,000 20,00,000 Rs. 80,00,000 Equity shares of Rs. 100 each 9%...

Extracted text: Q.2 The following is the capital Structure of Maruti Itd. Sources of capital Book value Market value Rs. 40,00,000 10,00,000 30,00,000 20,00,000 Rs. 80,00,000 Equity shares of Rs. 100 each 9% Cumulative preference shares of Rs. 100 each 11 % Debentures Retained Earnings 12,00,000 33,00,000 ТОTAL 1,00,00,000 1,25,00,000 Additional Information: 1. For the last year the company had paid equity dividend at 25% and its dividend is likely to grow 5% every year. 2. The current market price of the company's equity share is Rs. 200. 3. Corporate tax rate is 30% and shareholders personal income tax rate is 20% You are required to calculate: a) Cost of capital for each source of capital. b) Weighted average cost of capital on the basis of book value weights. c) Weighted average cost of capital on the basis of market value weights.