The capital structure of a company consists of 9% ₹8,00,000 bank loan. It also has 50000 equity shares of ₹10 each. The company is expecting EBIT of ₹2,00,000 per annum. If the cost of equity capital of the company is 10
CS Executive · Financial and Strategic Management · PYQS · December 2022
The capital structure of a company consists of 9% ₹8,00,000 bank loan. It also has 50000 equity shares of ₹10 each. The company is expecting EBIT of ₹2,00,000 per annum. If the cost of equity capital of the company is 10%, what is the overall cost of capital of the firm on the basis of Net Income Approach ? (A) 9.52% (B) 9.62% (C) 9.72% (D) 9.82%
Answer & Explanation:
Correct Answer: Option (B)
Official answer key: (B).
Topics: Financial Management
Related Questions in this Topic
- Assume that a firm has accurately calculated the net cash flows relating to an investment proposal. If the net present v...
- A firm has EBIT of ₹ 50,000. Market value of 10% debt is ₹ 80,000 and overall capitalization rate is 20%. Market value o...
- A firm has inventory turnover of 4 and cost of goods sold is ₹ 7,50,000. With better inventory management, the inventory...
- 80% of sales of ₹ 12,00,000 of a firm are on credit. It has a Receivable Turnover of 8. What is the Average collection p...
- A Company's Raw material storage period is 20 days; Finished goods storage period is 25 days; Receivables (Debtors) coll...