Compute the cost of equity of sanghmani limited

Reference no: EM133322575

Question: One-third of the total market value of Sanghmani Limited consists of loan stock, which has a cost of 10 per cent. Another company, Samsui Limited, is identical in every respect to Sanghmani Limited, except that its capital structure is all-equity, and its cost of equity is 16 per cent. According to Modigliani and Miller, if we ignored taxation and tax relief on debt capital, COMPUTE the cost of equity of Sanghmani Limited?

Reference no: EM133322575

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