Question

The following information has been extracted from the balance sheet of AB Ltd. as on March, 31, 2017 : 15 (Lakh) 200 40 160 400 Equity 11% Debentures ( 100 each) 9 0/0 Term loan Corporate tax rate applicable to the company is 35%. (a) (b) You are required to determine the weighted average cost of capital of the company. It had been paying dividends at an average rate of 12%. Will the weighted average cost be different if the market price of 100 share is 150 ?​

Answer 1

Explanation:

The following information has been extracted from the balance sheet of AB Ltd. as on March, 31, 2017 : 15 (Lakh) 200 40 160 400 Equity 11% Debentures ( 100 each) 9 0/0 Term loan Corporate tax rate applicable to the company is 35%. (a) (b) You are required to determine the weighted average cost of capital of the company. It had been paying dividends at an average rate of 12%. Will the weighted average cost be different if the market price of 100 share is 150 ?

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Answer 2

Answer:

The following information has been extracted from the

balance sheet of AB Ltd as on March 31, 2017 15

(Lakh)

Equity ( 100 each)

200

11% Debentures

40

9% Term loan

160

400

Corporate tax rate applicable to the company is 35%.

You are required to determine the weighted average

cost of capital of the company. It had been paying

dividends at an average rate of 12%.

(b) Will the weighted average cost be different if the

market price of 3 100 share is 150 ?