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Home / Questions / 800,8% Debentures of Rs.·1000 each issued at par Rs.800000 2000, 9% Preference shares of R...

800,8% Debentures of Rs.·1000 each issued at par Rs.800000 2000, 9% Preference shares of Rs. 100 each at par Rs.2,00,000 1,000, equity shares of Rs. 100 at par R~. 10,00,000 New debentures can be sold

800,8% Debentures of Rs.·1000 each issued at par Rs.800000 2000, 9% Preference shares of Rs. 100 each at par Rs.2,00,000 1,000, equity shares of Rs. 100 at par R~. 10,00,000 New debentures can be sold at par at 10% interest rate. preference shares will have a 12% dividend rate and can be sold at par. Equity shares can be sold, to net Rs. 90 per share. The shareholder's required rate of return is 8% which is expected to grow at 4%. Retained earnings for the year are estimated to be Rs. 1,00,000. The company is planning to expand its business accordingly and the company's tax rate is 50%. Determine the cost of each source of capital.

Apr 02 2021 View more View Less

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