Calculate the overall cost of capital for narottam ltd

Assignment Help Finance Basics
Reference no: EM133113166

Narottam Ltd has 11% debentures (Rs 1000/- face value) worth Rs 800 Cr outstanding. These debentures are due to be redeemed in another 4 years and are trading at Rs 970/- currently. The firm also has issued 11.2 crore shares (FV Rs 10/- each) having market capitalisation of Rs 1025 crores. Assuming that investors expect a return of 18% on firms of similar risk profile, calculate the overall cost of capital for Narottam Ltd. Consider corporate tax rate at 25% and risk-free rate of 6%.

Reference no: EM133113166

Questions Cloud

Income tax consequences only at the time of disposition : With regards to the differences between a life insurance policy which is "exempt" compared with a policy that is "non-exempt", which of the following statements
Waste management and recycling assessment : Waste Management and Recycling Assessment - What are the NSW EPA standards for solids, organics and bacteria, total nitrogen in treated sewage effluent
Present value of the principal of the bond : The selling price of an interest-bearing bond is equal to the present value of the principal of the bond
Value of investment after twenty years : What will be the value of his investment after twenty years? (You can use Excel on your workstation to compute this outcome)
Calculate the overall cost of capital for narottam ltd : Narottam Ltd has 11% debentures (Rs 1000/- face value) worth Rs 800 Cr outstanding. These debentures are due to be redeemed in another 4 years and are trading a
Potential issues of finding comparable firms : Price-earnings ratio (PE ratio) is a salient statistic about a stock. In valuation multiple approach, what are the potential issues of finding comparable firms
Prepayment risk and default risk : BOA originates 100 Fully Amortizing Fixed Rate Mortgages, each has a $1,000 balance, 4% interest rate (no fees), 25-year term, and annual payments. BOA immediat
What are the effects of second-hand smoke : What are the effects of second-hand smoke and parent alcoholism within the same household?
Calculate company weighted average capital : Preffered Stock: The company can sell a 4% preferred stock dividend with a par value of $75. Calculate Company weighted average capital

Reviews

Write a Review

Finance Basics Questions & Answers

  Determine the balance of the nol carryforward benefits

Assume that in 2016?,there are no uncertainties regarding the realization of the NOL carryforward benefits. All tax rates were enacted at the beginning.

  Financial valuation-retirement plans-down-payment

Charlotte's firm had sales of $525,000 in the year ended 2000. By the year ended 2012, sales had increased to $1,200,000. What was the average annual rate of increase?

  Calculate free cash flows to equity

Calculate free cash flows to equity, abnormal earnings, and abnormal earnings growth for the years 2014-2016.

  What is a uniform comparison

What happens if an investor deposits funds four days after placing an order? What is a Uniform Comparison? What is its purpose?

  What is the change in nii for the thrift

What is the change in NII for the thrift?

  Common ratios measures leverage

1. A compound average growth rate (CAGR) takes volatility into account. 2. Which of the following common ratios measures leverage?

  Return characteristics of a portfolio

Define the following and give an example: Risk - Return - Risk Preferences  and describe in terms of correlation and diversification the risk and return characteristics of a portfolio.

  What is the forgone lost future value of her 15000 over

economic trade-off of graduate school. deloressotomajor hopes to earn an extra 600000 over herremaining 40-year

  Calculate the yield to maturity on the bonds

Calculate the yield to maturity on the following bonds:

  Find expected return of boing stock

A family friend of yours calls you up asking for financial advice. She works for Boing (a local aircraft manufacturer) and is offered, as an employee benefit, a

  What is the present value of the annuity

What is the present value of the following annuity? $3404 every half year at the beginning of the period for the next 12 years

  What will be next year dividend

If it's the company's policy to always maintain a constant growth rate in its dividends, what will be next year's dividend?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd