Compute the overall cost of capital of surya ltd

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Question - In the year 2019, Surya LTD. was considering a major expansion of its operations. Firm decided to raise about Rs 2000 Million to funds its investment. To raise the funds firm decided the following capital structure. Debt Rs 800 Million Equity Rs 800 Million Preference share Rs 400 Million Firm managed to raise debt at 10% through loans raised from different sources. The current tax rate is 35%, The company is listed on NSE and Beta of the company's Stock is 1.13, return of benchmark indices is 17%. Face value of Preference share is Rs 100, Dividend Rate 8%, Maturity Period 5 years; Current Market Price is Rs 95. The rate of interest on Govt Bond is 7%. Compute the overall cost of capital of Surya Ltd and predict if they should go ahead with investment if the cash flows of the project are following Year 1 2 3 4 5 6 7 8 9 10 11 Cash Inflow 50 50 70 90 110 210 500 550 750 490 320.

Reference no: EM132943627

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