Question

The capital structure of HMT Ltd., as on 31st March 2018 is as Equity share capital (60 lakhs shares of 10 each) Reserves and Surpluses 12% Irredeemable Debentures of ₹100 each 600 lakhs 200 lakhs 200 lakhs The company paid equity dividend at the rate of 30% for last year and dividends are expected to grow by 5% every year. The current market price per share is 30 and tax rate applicable for the company is 40%. You are required to compute the following: (a) Cost of Equity and Cost of debt (b) Weighted Average Cost of Capital using Book Value weights. (c) The company plans to raise a further capital of 100 lakhs by way of long-term bank loan at 14%. But, this will increase the risk perception of investors and market price of equity share will fall to 25 a share. What will be the new WACC?

Answer 1

Answer:

Hello

Good morning

please folow me