Question

Y Ltd, issued 2,000 10% preference shares of Rs 100 each
at Rs 95 each. The company proposes to redeem the preference
shares at the end of 10 years. Calculate the cost of preference
shares.​

Answer 1

10.77 is the answer as reedemable value is equal to 2000*100*10/100 which is equal to 200000  prefrence dividend is equal to 2000*100 which is 20000

net proceeds is equal to 95*2000 which is 190000 and the cost of prefrence share is equal to pd +{(rv - np)/n}/[(rv+np)/2] by putting values we get the answer. n is given i.e 10