Compute the weighted average cost of capital, Financial Management

Assignment Help:

Q. Compute the weighted average cost of capital?

A company's subsequent to tax specific cost of capital are as follows:

Cost of debt                                                                10%

Cost of Preference Shares                                           12%

Cost of Equity Shares                                                   15%

The subsequent is the capital structure:

Source                                                                         Amount

Debt                                                                            3,00,000

Preference Share Capital                                             2,00,000

Equity Share Capital                                                   5,00,000

____________

 10,00,000

____________

Compute the weighted average cost of capital, Kw

Calculation of Weighted Average Cost of Capital using Book Value Weights:-

2373_Compute the weighted average cost of capital.png

The weighted average cost utilizing book value weights is 12.9%


Related Discussions:- Compute the weighted average cost of capital

Fund managers or the asset management company, Fund Managers or the Asset M...

Fund Managers or the Asset Management Company (amc) The role of fund managers is highly significant in the mutual fund operations. So far, this role is being played by the Mutu

Issuance calendar, Issuance Calendar Issuance calendar gives clear and ...

Issuance Calendar Issuance calendar gives clear and timely information about the borrowing program of the government. It clearly conveys the maturity profile of outstanding sto

State the concept of icq, ICQ's designed to: Identify possible area...

ICQ's designed to: Identify possible areas of weakness. Discover existence of internal controls. Questions are framed to highlight situations where: NO su

Evaluate net realisable value of assets, Q. Evaluate Net realisable value o...

Q. Evaluate Net realisable value of assets? Valuation (i) Method 1 - Net assets according to the statement of financial position Value = $295000 Reservation N

How do tax considerations affect the cost of debt, How do tax consideration...

How do tax considerations affect the cost of debt and the cost of equity? For the reason that interest on debt is tax deductible to the issuing firm, the higher the tax rate th

Basic concepts of assessing trading strategies, Leveraging can be described...

Leveraging can be described as an investing principle where borrowed funds are invested in a part of the securities. Leveraging can magnify either returns o

Limitations of the cash flow yield measure, Bond's potential re...

Bond's potential returns are calculated using measures like Yield to Maturity (YTM) and cash flow yield. Both these measures are not free from s

Effective rate of interest (eri), Question- Under a hire purchase deal str...

Question- Under a hire purchase deal structured by X Finance Ltd. for Y Corporation, the finance company has offered to finance the purchase of equipment that costs Rs. 200 lakh.

Emergency information panel, 1. It is mandatory that every carrier transpo...

1. It is mandatory that every carrier transporting hazardous materials should display correctly the emergency information panel. Emergency information panel should be legibly and

Write Your Message!

Captcha
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