Calculate the cost of capital of organization, Financial Management

The following particulars relate to ABC Ltd. at the end of 2008:

(i)  Rs. 500,000 equity shares of Rs. 10 each. Present dividend per share is Rs. 15; Market price Rs. 100 per share. Growth rate in dividend 5 per cent.

(ii)  Retained earnings - Rs. 200,000.

(iii)  8% Rs. 500,000 preference shares of Rs. 50 each issued at a discount of 5%.

(iv) Debentures of Rs. 1,000 each, repayable at par in 2012, were issued as follows:

Type A: 200 A debenture of 13 per cent issued at a premium of 10 per cent.

Type B: 100 B debentures of 10 per cent issued at a premium of 10 per cent.

(v)  11% term-loan of Rs. 500,000. ABC Ltd. received the entire proceeds of the loan.

Assuming that ABC Ltd. is in a 50 per cent tax bracket and that it uses book values as weights, calculate the overall cost of capital of ABC Ltd.

 

 

Posted Date: 3/9/2013 2:32:40 AM | Location : United States







Related Discussions:- Calculate the cost of capital of organization, Assignment Help, Ask Question on Calculate the cost of capital of organization, Get Answer, Expert's Help, Calculate the cost of capital of organization Discussions

Write discussion on Calculate the cost of capital of organization
Your posts are moderated
Related Questions
(a) iTraxx is a group of credit derivative index managed by the International Index Company (IIC) and covering Europe and Asia and Australia. The body in the portfolio forming th

In two of the four months of the cash budget Thorne Co has a cash shortage with the highest cash deficit being the opening balance of $40000. This cash shortage which has occurred

The XYZ company supplies products to a number of original equipment manufacturers (OEM's). It employs 5,000 mostly unionized workers and generates about $2.2 billion in revenue ann

How does accounts receivable factoring work?  What are the benefits to the two parties involved?  What are the risks? Factoring is when one firm trade accounts receivable (AR)

A.I.G. is often called the largest insurance entity in the world. A.I.G.'s total assets were $860 billion on 12/31/2008 (dwarfing any other insurance entity) with 116,000 employees

Types of Government Stocks Issue of Stock through AuctionThe RBI, on behalf of the government, issues notification to auction government securities, stating the amount and time

Q. What is Dependent Care Expenses? Dependent Care Expenses - Qualified child care expenses would allow a taxpayer this computed credit against tax. Amounts can be found on the

The Pennington Corporation issued a new series of bonds on January 1, 1979. The bonds were sold at par ($1,000), have a 12 percent coupon, and mature in 30 years, on December 31,

Illustrate the process of calculating call/ put options yields Issuing corporation will use provision if interest rates fall substantially below coupon rates offered on the se

Portfolio Project The purpose of this project is to help you to gain an understanding of how the stock market works and of the relationship between theory and practice. You are gi