The market price of a company’s equity share is Rs 220. The expected dividend per share is Rs 20 which is expected to grow at a constant rate of 6% p.a. Find the cost of equity share capital.
The capital structure of a company has the following components:
10,000 shares of Rs 100 each = Rs 10,00,000
10% 1,000 preference shares of Rs 100 each = 1,00,000
12% debentures = 9,00,000
The current market price of equity share is Rs 140. The expected dividend is Rs 20 which is to grow at 5% p.a. Tax rate is 30%. Find the weighted average cost of capital.
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