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
What are the primary reasons that companies hold cash? Companies hold cash to make essential payments, to take benefit of opportunities as they arise, and to cover unforeseen eme

You invest $1,000 at an annual interest rate of 5% compounded continuously. How much is your balance after 8.5 years?  How long will it take you to accrue a balance of $4,000? What

List and describe the three career opportunities in the field of finance? Finance has three key career paths: financial markets and institutions, financial management and inves

Extendible reset bonds are floaters in which the issuer is required to reset the coupon rate so that the issue will trade at a predetermined price (usually above

Techiniques of capm Effects of capm

Q. What is the basic Approach of the financial management ? 1) The first approach view finance as to providing the funds needed by a business on the most suitable terms. This ap

After the calculation of cash flow yield and the average life of the asset-backed and mortgage-backed security based on default, prepayment and recovery ass

What is the difference between business risk and financial risk? Business risk refers to the improbability a company has with regard to its operating income also known as earni

Q. What are the Benefits of Holding Inventories? (1) Timing of Demand and Supply: - Requirement to hold inventory of raw materials arises because it isn't possible for a firm

Operating segments An operating segment is a component of an organisation It engages in business activities from that it can earn revenues and incur expenses(this also c