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1. The capital structure of XYZ Ltd is:

TABLE GVEN BELOW

Rs 400 million Rs 50 million Equity Capital (40 million shares: Rs 10 par) Preference capital, 12 percent(500,000 shares, Rs

The next expected dividend per share is Rs 1.5. The dividend per share is expected to grow at the rate of 8 percent. The market price per share is Rs 50. Preference share redeemable after 10 years is currently selling for Rs 90 per share. Debentures redeemable after 5 years are selling for Rs 80 per debenture. Calculate the weighted average cost of capital in book value terms.Please explained in not more than 1000 words.Tax rate is 50 percent

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Answer #1

Cauty Equity loob Cost of Equitycke = Di +9= 1:5 +0:08 so Il % — Book value = you millionWACC in book value terms = K xo tk, xa, txt — 1/x Чот 22o o + los/x 120 3 2о + 6 хра = Jo - 73 7. Teachers Signature........

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