Gamma Ltd. has furnished the following information: Earnings Per Share (EPS) ₹4 Dividend payout ratio 25% Market price per share ₹50 Rate of tax 30% Growth rate of dividend 10% The company wants to raise additional capit
CS Executive · Financial and Strategic Management · PYQS · December 2023
Gamma Ltd. has furnished the following information: Earnings Per Share (EPS) ₹4 Dividend payout ratio 25% Market price per share ₹50 Rate of tax 30% Growth rate of dividend 10% The company wants to raise additional capital of ₹12 lakhs including debt of ₹6 lakhs. The cost of debt (before tax) is 10% up to ₹3 lakhs and 15% beyond that. The weighted average cost of capital of additional funds raised by the company on the basis of dividend growth model is approx. :
Answer & Explanation:
Correct Answer: Option (C)
Official answer key: (C).
Topics: Financial Management
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