Q.2 The following is the capital Structure of Maruti Itd.Sources of capitalBook valueMarket valueRs.40,00,00010,00,00030,00,00020,00,000Rs.80,00,000Equity shares of Rs. 100 each9% Cumulative preference shares of Rs. 100 each11 % DebenturesRetained Earnings12,00,00033,00,000ТОTAL1,00,00,0001,25,00,000Additional Information:1. For the last year the company had paid equity dividend at 25% and its dividend is likelyto grow 5% every year.2. The current market price of the company's equity share is Rs. 200.3. Corporate tax rate is 30% and shareholders personal income tax rate is 20%You are required to calculate:a) Cost of capital for each source of capital.b) Weighted average cost of capital on the basis of book value weights.c) Weighted average cost of capital on the basis of market value weights.

Cost of each source of capital Equity Cost of Equity= Expected dividend per share/Market value per…

Answered: Q.2 The following is the capital…

Corporate Fin Focused Approach

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Chapter14: Distributions To Shareholders: Dividends And Repurchases

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Q 04: Required: Calculate the value of Firm and WACC for the following capital structures EBIT of Firm. 250,000 Ke = 11% Kd = 7% Debt capital Rs. 500,000 Debt = Rs. 700,000 Debt =Rs. 200,000 Particulars Case 1 Case 2 Case 3 EBIT 250,000 250,000 250,000 (-) Interest 30,000 42,000 12,000 EBT 220,000 208,000 238,000 Ke 10% 10% 10% Value of Equity 22,00,000 208,0000 2380,000 (EBT / Ke) Value of Debt 500,000 700,000 200,000 Total Value of Firm 2,700,000 2,780,000 2,580,000 WACC (EBIT / Value) * 100
The company capital structure consist of debt 340000 @ 4.05%, common stock 40% of preferred stock @ 9.09% and preferred stock 400000 @ 19.50%, calculate company’s weighted average cost of capital. Select one: a. 12.50% b. 11.79% c. 14.98% d. None of the option e. 13.15%
Q18 If the company’s EBIT is OMR 500,000; market value of the equity is OMR 2,000,000 and value of Debt is OMR 4,000,000; then what is the overall cost of capital of the firm under Net Income Approach? a. 12.5% b. 10% c. 25% d. 8.33%
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M12-15. Estimating Cost of Equity Capital Assume that a company’s market beta equals 0.6, the risk-free rate is 5%, and the market return equals 13%. Compute the company’s cost of equity capital. Round answer to one decimal place (ex: 0.0245 = 2.5%) Answer%
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12. All the 200 treasury shares were sold for P 22,000. How would the resale of the treasury shares be recorded?13. As a result, the effect on the total Additional Paid In Capital would be ____________________ (indicate increase or decrease)
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Question 4 The following information is taken from Tanaka Bhd for the year ended 31 December 2020. Preference dividend declared and fully paid in 2020: RM100,000 Ordinary dividend declared and fully paid in 2020: RM3,960,000 Preference shares marketable price per unit at 31 December 2020: RM4.60 Ordinary share marketable price per unit at 31 December 2020: RM9.00 2. From the industry average, identify and comment on Tanaka Bhd’s profitability and short-term liquidity.
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