|
please solve the following question:
Y Ltd. retains Rs. 7,50,000 out of its current earning. The expected rate of return to the shareholders. If they |
|
had invested the funds elsewhere is 10%. The brokerage is 3% and the shareholders came in 30% tax bracket. |
|
Calculate the cost of retained earning. |
I think it should be like this
Kr = Ke (1-t) (1-b)
Where Kr = Cost of retained Earnings
Ke = Expected rate or return to shareholder
t = tax rate b= brokerage cost
Kr = 10% (1-0.3) (1-0.03)
Hence Kr = 6.79% (Apply this cost to 7,50,000)
Plz verify the answer, if available.
Interactive Media Pvt Ltd.
New Delhi
CA Inter
View Details
Twenty Point Nine Five Ventures Private Limited
Noida
CA Inter
View Details
Naveen Fintech Pvt Ltd
Kolkata
CA Inter
View Details
CCI
Pro
CAclubindia
