Zoya Ltd has paid up equity capital of 500000 equity shares of rs 10 each. The current market price of the share is rs. 25. During the current year the company has declared a divided of rs 5 per share .the company has also previously issued 14% preference share of rs 10 each aggregating Rs25 lakhs and 12% 50000 debentures of rs 100 each. The company corporate tax rate is at 40%, and the growth in dividends on equity shares is expected at 5%. In the case of preference shares the company has received only 95% of the face value of shares after deducting issue expense. Calculate WACC and comment it
Added by Robert F.
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The formula for the cost of equity is: \[ Ke = \frac{D1}{P0} + g \] Where: - \( D1 \) is the expected dividend per share for the next period. - \( P0 \) is the current market price of the share. - \( g \) is the growth rate of dividends. Given: - Current Show more…
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