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
Modi Wires and Cable Ltd intends to finance its INR 20 million modernization plan for which it is trying to decide between debt and external equity. The management feels that the e

a) Year 2 ROCE = $400k / $1,000k = 40% Year 1 ROCE = $360k / $800k = 45% b) ROCE is an efficiency ratio that measures the monetary performance of a firm compared with the amo

Q. Evaluate Certainty Equivalent Coefficient? Illustration: - Presume the risky cash flow is Rs. 200000 and the riskless cash flow is Rs. 140000. The Certainty Equivalent Co

•?Detailed information should form the part of your answer (Word limit 150 to 200 words). Case let 1 This case provides the opportunity to match financing alternatives with the nee

lease finance and its types

In the telecom industry of the Australia, these are some most important organizations such Vodafone Austrelia‎, TransACT Capital Communications, Optus, and Telstra. Vodafone A

Franchise (licensing) - Granting or licensing of the right to use systems, expertise,brandsknow how etc. to another  organisation,  generally in  return  for  a  profit  share

Part 1: Contingency plan Create contingency plans for the following scenarios: > One of your highly qualified consultants has given three months notice and is planning to move to a

Q. How are LIBOR, TIBOR and EURIBOR determined? London Inter Bank Offered rate ( LIBOR) and is the rate of interest at which banks offer funds to other banks in marketable siz

Q. Explain about Inventory Turnover Ratio ? Inventory Turnover Ratio: - Definite items of inventory are slow moving. It signifies that their consumption is quite slow and capit