How to estimate what is the cost of debt

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Question 1. The present value of Rupees. 20,000 to be received after five years from now assuming 6% time preference for money is:

a.) 14,940

b.) 16,776

c.) 12,551

d.) 11,500

Question 2. Given the following information about Nile Ltd. The market price of its share using the walter's models is Rs ________ equity capitalization rate (Ke)=16%,Earnings per share (E) =Rs.13 ,Divident paid out ratio=25%, Assume n investment is 14%

a.) 73.6

b.) 56.45

c.) 80.3

d.) 71.22

Question 3. Axis Ltd. is issuing 15% debentures (face value Rs.60). The net amount realized per debuntures is Rs. 54, and they are redeemable at par after 6 years. At a corporate tax rate of 40%. What is the cost of debt?

a.)16.54%

b.)17.54%

c.)11.23%

d.)14.74%

Question 4. If the required rate of return in Excel Ltd shares is 16%, risk free rate of return is 8% and the rate of return on market portfolio is 11%, What is the beta of the stock?

a.)1.67

b.) 2.67

c.)0.38

d.)2.87

Reference no: EM132567535

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