(d) PQR Ltd. has the following capital structure on October 31, 2010 :
Rs.
Equity Share Capital
(2,00,000 Shares of Rs. 10 each)
Reserves & Surplus
12% Preference Shares
9% Debentures
20,00,000
20,00,000
10,00,000
30,00,000
80,00,000
The market price of equity share is Rs. 30. It is expected that the company will pay next year a dividend of Rs. 3 per
share, which will grow at 7% forever. Assume 40% income tax rate.
You are required to compute weighted average cost of capital using market value weights.
in the suggested answers,....cost of capital of reserves and surpluses is nt computed ....why is it so...?????
please help.....
CAclubindia
