ABC Ltd. has ₹50,00,000 in long term debts, ₹10,00,000 in preferred stock and ₹40,00,000 in common equity. All the values are on market value. The before tax cost of debts 10%. Cost of preferred stock are 11% and cost of
CS Executive · Corporate and Management Accounting · PYQS · December 2021
ABC Ltd. has ₹50,00,000 in long term debts, ₹10,00,000 in preferred stock and ₹40,00,000 in common equity. All the values are on market value. The before tax cost of debts 10%. Cost of preferred stock are 11% and cost of common equity is 15%. Assume a tax rate of 40%. The overall cost of capital is ............
Answer & Explanation:
The official key records '*'. This question is excluded from automatic grading because the source does not supply an unambiguous valid choice. Official source note: None of the option is correct. Correct Answer is 10.10%.
Topics: Financial Management
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