00:02
We need to calculate the weighted average cost of capital that is wacc for mario limited.
00:08
So we need to determine the cost of equity and the cost of depth and then use the weights of each component based on the market values.
00:15
So here are the calculations number one cost of equity that is re so we can calculate the cost of equity using the capital asset pricing model.
00:29
That is capm.
00:31
So re is equal to rf added to beta rm subtracted from rf where re is the cost of equity.
00:49
Rf is the risk -free rate, which is equal to 8 .2 percent.
01:00
B is the beta of the company that is 1 .6 and rm is equal to return on the market.
01:15
Which is equal to 18 % so let's calculate re is equal to putting the values 8 .2 percent added to 1 .6 multiplied by 18 % subtracted from 8 .2 percent, which is equal to 8 .2 percent added to 1 .6.
01:43
Multiplied by 9 .8 percent is equal to 8 .2 percent added to 15 .68 percent.
01:55
So evaluating it we get 23 .88 percent.
02:01
Then number two cost of debt.
02:07
That is rd.
02:12
So the cost of debt is based on the yield to maturity maturity that is ytm of the debentures.
02:20
So given that ytm is 11 % and rd is equal to 11 % then number three weight of debt that is wd.
02:41
So the market value of the 8 % debentures.
03:02
Is rupees.
03:08
Sorry, i 22 lab then number four weight of equity.
03:23
That is w e.
03:26
So the market value.
03:28
Of the ordinary shares is 55 lakh shares.
03:51
Multiplied by.
03:57
R3 per share.
04:01
Which is equal to r1 crore 65 lakh.
04:09
Now wait of.
04:14
Present shares, so the preference share that is.
04:28
Wp.
04:31
So the market value of the preference share is.
04:38
1 crore.
04:43
Shares multiplied by r2 per share, which is equal to.
04:52
R 20 lakh.
05:02
Then wait of bank loan.
05:09
That is wp.
05:11
So the market value of the bank loan is r 50 lakh total market value.
05:26
Of the firm.
05:31
That is v.
05:32
So v is equal to wd added to w e added to wp added to wb which is equal to putting the values 22 lakh...