ABC Ltd. has the mix: Sources Equity Capital (10,000 shares at Rs.10 each) 12% Preference Share Capital (1,000 shares at par value) Retained Earnings 14% Non-Convertible Debentures (800 deb. at par value) Total 100,000 100,000 120,000 80,000 400,000 he equity shares of the company are trading at 250. The dividend paid per share is 20.00 xpected to grow at a constant rate of 10%. The preference shares are redeemable after 8 yem les proceeds realized at the time of issue is 75 per share. The debentures are redeemabl r and their current market price is 90 per debenture. The tax rate applicable to the firm e WACC of the company?
ABC Ltd. has the mix: Sources Equity Capital (10,000 shares at Rs.10 each) 12% Preference Share Capital (1,000 shares at par value) Retained Earnings 14% Non-Convertible Debentures (800 deb. at par value) Total 100,000 100,000 120,000 80,000 400,000 he equity shares of the company are trading at 250. The dividend paid per share is 20.00 xpected to grow at a constant rate of 10%. The preference shares are redeemable after 8 yem les proceeds realized at the time of issue is 75 per share. The debentures are redeemabl r and their current market price is 90 per debenture. The tax rate applicable to the firm e WACC of the company?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Ex. 3 ABC Ltd, has the following financing
mix: \table[[Sources], [Equity Capital (10,000 shares at Rs.10 each ), 100, 000], [12% Preference Share Capital (1,000 shares at par value), 100,000], [ Retained Earnings, 120, 000], [14% Non- Convertible Debentures (800 deb. at par value), 80, 000], [Total, 400, 000]] The equity shares of the company are trading at ₹50. The dividend paid per share is ₹20.00 and the DPS is expected to grow at a constant rate of 10%. The preference shares are redeemable after 8 years at par and the sales proceeds realized at the time of issue is75 per share. The debentures are redecmable after 5 years at ar and their current market price is ₹90 per debenture. The tax rate applicable to the firm is 50%. What is he WACC of the company?
Transcribed Image Text:Hou
Ex. 3
ABC Ltd. has the following financing mix :
Sources
Equity Capital (10,000 shares at Rs.10 cach)
12% Preference Share Capital (1,000 shares at par value)
Retained Earnings
14% Non-Convertible Debentures (800 deb. at par value)
Total
100,000
100,000
120,000
80,000
400,000
The equity shares of the company are trading at 50. The dividend paid per share is 220.00 and the DPS is
expected to grow at a constant rate of 10%. The preference shares are redeemable after 8 years at par and the
sales proceeds realized at the time of issue is 75 per share. The debentures are redeemable after 5 years at
Dar and their current market price is 90 per debenture. The tax rate applicable to the firm is 50%. What is
he WACC of the company?
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