Question

Pess
4.
Three companies A, B & C are in the same type of business and hence have similar operating risks.
However, the capital structure of each of them is different and the following are the details:
15%
CU
ne
А
B
С
Particulars
4,00,000 2,50,000 5,00,000
Equity share capital (Face value 10 per share)
15
20
12
Market value per share
2.70
4
Dividend per share
2.88
Nil
1,00,000 2,50,000
Debentures (face value per debenture *100)
Market value per debenture
125
80
Interest rate
10%
8%
Assume that the current levels of dividends are generally expected to continue indefinitely and
the income-tax rate at 50%. You are required to compute the weighted average cost of capital of
each company.​

Answer 1

Answer:

not understand clearly say