Q50523c From the following capital structure of a company find out the weighted average cost of capital using (a) book value weights and (b) market value weights.

Sources Book Value (Rs.) Market Value (Rs.) After Tax Cost %
Equity Share Capital (Rs. 1 0 per share) 45, 000 90,00 0 14
Retained Earn ings 15, 000 — 13
Preference Share Cap ital 10, 000 10,00 0 10
Debent ures 30, 000 30,00 0 5

Question based on ISBM MBA Solved Assignmentand other course

Solution:

(a.) Taking Book Value Weights

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(b) Taking Market Value Weights

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