The capital structure of KC Ltd. is : Equity Share Capital ₹250 lakh, Long-term Debt ₹110 lakh, Bank Overdraft ₹40 lakh. The average rate of return on similar types of companies is 20%, while risk-free return is 10%. Rat

CS Executive · Corporate and Management Accounting · PYQS · December 2019
The capital structure of KC Ltd. is : Equity Share Capital ₹250 lakh, Long-term Debt ₹110 lakh, Bank Overdraft ₹40 lakh. The average rate of return on similar types of companies is 20%, while risk-free return is 10%. Rate of interest charged by bank is 18%. Weighted Average Cost of Capital (WACC) will be :
(A) 16%
(B) 13.55%
(C) 16.25%
(D) 17.05%

Answer & Explanation:

Correct Answer: Option (D)

Official answer key: (D).

Topics: Financial Management

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