Q4) Consider the information of the K Ltd. below as on 31st March 2020 (All are in Rs. Million) Equity Market Capitalization Net Income (Book Value) (Market Value) 142.2 Debt Face-Value 10 800 1000 2000 K Ltd is planning to invest in a new project that would be completely funded by equity. Find the Weighted Average Cost of Capital of K Ltd. For the new project. Other information: Risk Free Rate Historical standard deviation of returns of K ltd Historical standard deviation of the market Covarinace between K Ltd. Return and market return 6.00% 20.00% 15.00% 0.0255 Correlation between K ltd return and market return 0.8500 Market Risk Premium Last year market return Tax Rate of KLtd 10.00% 25.60% 30.00% Cost of debt of K Ltd 9.00%

Q4) Consider the information of the K Ltd. below as on 31st March 2020 (All are in Rs. Million) Equity Market Capitalization Net Income (Book Value) (Market Value) 142.2 Debt Face-Value 10 800 1000 2000 K Ltd is planning to invest in a new project that would be completely funded by equity. Find the Weighted Average Cost of Capital of K Ltd. For the new project. Other information: Risk Free Rate Historical standard deviation of returns of K ltd Historical standard deviation of the market Covarinace between K Ltd. Return and market return 6.00% 20.00% 15.00% 0.0255 Correlation between K ltd return and market return 0.8500 Market Risk Premium Last year market return Tax Rate of KLtd 10.00% 25.60% 30.00% Cost of debt of K Ltd 9.00%

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter15: Harvesting The Business Venture Investment

Section: Chapter Questions

Problem 1eM

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