Question

4. Hypothetical Ltd. is planning to raise * 20.00,000 additional long-term funds to finance its
additional capital budget of the current year. The debentures of the company are to be
sold on a 14 per cent yield basis to the company and equity shares to be sold at 50 per
share net to the company, are the alternatives being considered by the company. It
expects to pay dividend of 5 per share at the end of the coming year. The required rate
of retur expected from the point of view of the investment community is 16 per cent.
Determine the growth rate of the company which the market is anticipating.
On the basis of 8 per cent growth, at what price should the equity share be sold
by the company? Ignore dividend tax.
extin
) Assuming that the management is anticipating growth rate of only 4 per cent
per year, what form of financing would you recommend?​

Answer 1

Answer:

I don't know bro

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