Practice Test

Q1) The cost of equity share or debt is called Show Answer

Q2) In which of the following method cost of equity capital is computed by dividing the dividend by market price per share or net proceeds per share? Show Answer

Q3) In weighted average cost of capital, a company can affect its capital cost through - 1. Policy of capital structure; 2. Policy of dividends; 3. Policy of investment Select the correct answer from the options given below: Show Answer

Q4) Which of the following is correct formula to calculate cost of equity under dividend yield method? Show Answer

Q5) ........... is the rate of return associated with the best investment opportunity for the firm and its shareholders that will be forgone if the projects presently under consideration by the firm were accepted. Show Answer

Q6) Cost of capital is equal to required return rate on equity in case if investors are only - Show Answer

Q7) Which of the following model/method makes use of beta (P) in calculation of cost of equity? Show Answer

Q8) Marginal cost - Show Answer

Q9) Bond risk premium is added in to bond yield to calculate - Show Answer

Q10) The cost of equity share or debt is called specific cost of capital. When specific costs are combined, then we arrive at - Show Answer

Q11) Statement I: Where earnings, dividends and equity share price all grow at the same rate, the cost of equity capital may be computed by dividend growth method. Statement II: When risk free rate is added to the market rate of return risk premium for the stock is arrived. Select the correct answer from the options given below: Show Answer

Q12) Interest rates, tax rates and market risk premium are factors which - Show Answer

Q13) In calculating the costs of the individual components of a firm's financing, the corporate tax rate is important to which of the following component cost? Show Answer

Q14) The rate of return on its existing assets that a firm must earn to maintain the current value of the firm's stock is called the: Show Answer

Q15) Economic value added measures - Show Answer

Q16) Which one of the following is a correct statement regarding a firm's weighted average cost of capital (WACC) Rs. Show Answer

Q17) If a company's EVA is negative - Show Answer

Q18) The term 'EVA' is used for: Show Answer

Q19) Market values are often used in computing the weighted average cost of capital because - Show Answer

Q20) ................................enhance the market value of shares and therefore equity capital is not free of cost. Show Answer

Q21) Consider statements given below: 1. A debt-equity ratio of 2:1 indicates that for every 1 unit of equity, the company can raise 2 units of debt. 2. The cost of floating a debt is greater than the cost of floating an equity issue. State True or False: Show Answer

Q22) Which one of the following represents the best estimate for a firm's pre-tax cost of debt? Show Answer

Q23) EVA = Rs. Show Answer

Q24) An increase in market value of preferred stock wil .................. the cost of preferred stock. Show Answer

Q25) Which of the following is advantage of EVA? Show Answer

Q26) Capital structure weights are based on the: Show Answer

Q27) The average of a firm's cost of equity and after tax cost of debt that is weighted based on the firm's capital structure is called the - Show Answer

Q28) Which of the following action can be taken to improve EVA? Show Answer

Q29) Sam Toys is considering developing and distributing a new board game for children. The project is similar in risk to the firm's current operations. The firm maintains a debt-equity ratio of 0.40 and retains all profits to fund the firm's rapid growth. How should the firm determine its cost of equity? Show Answer

Q30) Market value added is the difference between - Show Answer

Q31) All else constant, which one of the following will increase a firm's cost of equity if the firm computes that cost using the security market line approach? Assume the firm currently pays an annual dividend of Rs.1 a share and has a beta of 1.2. Show Answer

Q32) ................................represents the economic profits generated by a business above and beyond the minimum return required by all providers of capital. Show Answer

Q33) A firm's overall cost of equity is: Show Answer

Q34) The common stock of a company must provide a higher expected return than the debt of the same company because - Show Answer

Q35) The after tax cost of debt generally increases when: I. A firm's bond rating increases. II. Market rate of interest increases. III. Tax rates decrease. IV. Bond prices rise. Select correct answer from the options given below. Show Answer

Q36) Rank in ascending order (Le. 1 - lowest, while 3 = highest) the likely after-tax component costs of a Company's long-term financing. Show Answer

Q37) The cost of preferred stock is computed the same as the: Show Answer

Q38) The pre-tax cost of debt: Show Answer

Q39) The cost of preferred stock: Show Answer

Q40) ................................describes the relationship between non-diversifiable and return for securities. Show Answer

Q41) The after tax cost of debt: Show Answer

Q42) Weighted average cost of capital for a firm may be dependent upon the firm’s:
1. Rate of growth
2. Debt-equity ratio
3. Preferred dividend payment
4. Retention ratio
Select correct answer from the options given below. Show Answer

Q43) By observing the financial market, we can observe that - Show Answer

Q44) Which one of the following statements is correct for a firm that uses debt in its capital structure? Show Answer

Q45) As per Net Income approach if capitalization rate increases, market value of firm - Show Answer

Q46) Which of the following formula is correct to calculate the value of levered firm as per MM Model? Show Answer

Q47) P/E Ratio is - Show Answer

Q48) Market price = Rs. Show Answer

Q49) R Ltd. has disbursed a dividend of Rs. 75 on each equity share of Rs. 25. The market price of share is Rs. 200. Corporate tax rate is 40%. Its cost of equity is - Show Answer

Q50) F Ltd. issued 1,00,000 equity share of Rs. 100 each at a premium of Rs. 20 each. Company has incurred issue expenses of Rs. 50,000. Corporate tax rate is 40%. The equity shareholders expects the rate of dividend to 18% p.a. Cost of equity = Rs. Show Answer

Q51) The equity of JPG Ltd. is traded in the market at Rs. 225 each. It book value per share is Rs. 100. The dividend expected at the year end per share is Rs. 45. The subsequent growth in dividends is expected at the rate of 0.06. Calculate the cost of equity capital. Show Answer

Q52) Sara Ltd. has its shares having face value of Rs. 25 each quoted on the stock exchange, the current price per share is Rs. 60. The gross dividends per share over the last four years have been Rs. 3, Rs. 3.3, Rs. 3.63 & Rs. 4. Calculate cost of equity. Show Answer

Q53) Current market price of equity shares of Jack Ltd. is Rs. 120. The company has issued new equity shares of Rs. 30 each at Rs. 120 and the cost of its flotation is Rs. 1.50 per share. The gross dividends per share over the last six years have been Rs. 3.15, Rs. 3.3, Rs. 3.48, Rs. 3.63, Rs. 3.81 and Rs. 4.02. It is expected to maintain the fixed dividend payout ratio in the future. Applicable tax rate is 35%. Cost of equity of Jack Ltd. is - Show Answer

Q54) Bharat Ltd. has its equity shares of Rs. 10 each quoted in a stock exchange with market price of Rs. 140. A constant expected annual growth rate of 6% and a dividend of Rs. 9 per share has been paid for the last year. Calculate the cost of capital. Show Answer

Q55) P Ltd. has 1,50,000 equity shares of Rs. 25 each and its current market value is Rs. 115 each. The before tax profit of the company for the year just ended is Rs. 36,36,363. Tax rate is 34%. Cost of equity of P Ltd. - Show Answer

Q56) NSZ Ltd. has equity of 15 Million and 10% debentures of 20 Million. Cost of equity is 18% and pre-tax cost of debt is 10%. Company estimates its EBI for 7 Million. Applicable tax rate is 30%. What is the Economic value added of NSZ Ltd. Show Answer

Q57) Maya Ltd. share beta factor (P) is 1.1214. Dividend paid by the company last year was Rs. 3.60 per share on face value of Rs. 20. The risk free rate of interest on government bonds is 7.5%. The expected rate of return on company equity shares is 13%. What is the cost of equity (Ke) of Maya Ltd. Rs. Show Answer

Q58) H Ltd. p is 1.8025. Dividend paid by the company last year was Rs. 9 per share on face value of Rs. 30. The risk free rate is 0.61275. Risk premium is 0.0825. Calculate cost of equity capital. Show Answer

Q59) Rao Ltd. earns profit after tax Rs. 3,96,000. Corporate tax is 0.4. Its capital structure consist of equity shares Rs. 9,60,000; 15% Term loan Rs. 4,80,000. Cost of equity is 0.12. Its economic value added is Show Answer

Q60) Lava Inc.'s Rs. 100 par-value preferred stock just paid its Rs. 10 per share annual dividend. The preferred stock has a current market price of Rs. 96 a share. The firm's margined tax rate is 40 per cent, and the firm plans to maintain its current capital structure relationship into the future. The component cost of preferred stock to Lava Inc. would be closest to - Show Answer

Q61) A financial consultant has gathered following facts for HPLC Ltd. Systematic risk of the firm is 1.1425.182 days treasury bill yield is 6%. Expected yield on market portfolio is 13%. GDP growth rate is 9%. Sensex is 39,118. What is the cost of equity? Show Answer

Q62) Following details are submitted by Rajlakhami Ltd. EBIT Rs. 350 lakh; Equity Capital Rs. 425 lakh; Reserves & Surplus Rs. 325 lakh; 10% Debentures Rs. 1,000 lakh; Current Assets Rs. 82 lakh; Cost of Equity 17.5%; Income Tax Rate 30%; Economic Value Added = Rs. Show Answer

Q63) An analyst has calculated economic value added < >f Rs. 43,750 for Z Ltd. WACC of the company is 11.5% and applicable tax rate is 30%. The company paid interest of Rs. 1,00,000 during the year. Total assets of the compar y are Rs. 17,50,000. What is profit after tax (PAT) of the company? Show Answer

Q64) The beta coefficient of Zebra Ltd. is 1.16. The company has been maintaining 2.5% rate of growth in dividends and earnings. The last dividend paid was Rs. 1.20 per share. Return on government securities is 5%. Return on market portfolio is 7%. The current market price of one share of Zebra Ltd. is Rs. 14. The earnings per share is Rs. 1.95. It was decided to take cost of equity, the average for four methods that Eire generally adopted to calculate the cost of equity in general. Average Ke = Rs. Show Answer

Q65) A Company issues Rs. 50,00,000 12% Debentures of Rs. 100 each. Risk premium is 8%. Debentures are redeemable after the expiry of fixed period of 7 yeaRs. The Company is in 35% tax bracket. Calculate the cost of debt after tax, if debentures are issued at par. Show Answer

Q66) Prsanna Ltd. issued 12% bonds of Rs. 100 each at par. Corporate tax rate is 34% including surcharge and education cess. Cost of Debt = Rs. Show Answer

Q67) Parag Ltd. issued 14% bonds of Rs. 100 each at 98%. Corporate tax rate is 34%. Issue expense per bond was Rs. 1.5. Cost of Debt = Rs. Show Answer

Q68) A Company issues Rs. 75,00,000 12% Debentures of Rs. 100 each. Risk premium is 13.5%. Debentures are redeemable after the expiry of fixed period of 7 years at par. The Company is in 35% tax bracket. Calculate the cost of debt after tax, if debentures are issued at 10% discount. Show Answer

Q69) A Company issues Rs. 48,50,000 12% Debentures of Rs. 100 each. Debentures are redeemable at par after the expiry of fixed period of 7 yeaRs. The Company is in 35% tax bracket. Calculate the cost of debt after tax, if debentures are issued at 10% premium. Show Answer

Q70) Following data is available for XYZ Ltd.: No. of debentures = Rs. 5,00,000; Face value = Rs. 1,000 Coupon rate = 8%; Discount on issue = 1% of face value Issue expenses = Rs. 6,25,000 Term = 12 years Corporate tax rate = 25%; These debentures are redeemable at premium of Rs. 14. What is cost of debt (Kd) Rs. Show Answer

Q71) Y Ltd. issues preference shares of face value Rs. 500 each carrying 14% dividend and it realizes Rs. 480 per share. The shares are repayable after 12 years at 2% premium. Corporate tax rate is 25%. Issue expense per share was Rs. 2.5. Show Answer

Q72) PAPA Ltd. retains Rs. 26,25,000 out of its current earnings. The expected rate of return to the shareholders, if they had invested the funds elsewhere is 15%. The brokerage is 2% and the shareholders come in 14% tax bracket. Calculate the cost of retained earnings. Show Answer

Q73) Chetna Fashions is expected to pay an annual dividend of Rs. 0.80 a share next year. The market price of the stock is Rs. 22.40 and the growth rate is 5%. What is the firm's cost of equity? Show Answer

Q74) Sweet Treats common stock is currently priced at Rs. 19.06 a share. The company just paid Rs. 1.15 per share as its annual dividend. The dividends have been increasing by 2.5% annually and are expected to continue doing the same. What is this firm's cost of equity? Show Answer

Q75) Narendra Ltd. is planning for issue of 15% Preference Shares of Rs. 100 each, redeemable at par after 8 years. They are expected to be sold at a premium of 5%. Flotation cost is 9% of face value. Corporate tax is 35% and corporate dividend tax is 10%. The cost of preference shares on the basis of present value of future cash flow shall be - Use following rates for your calculations: PV of Rs. 1 for 1 to 8 years - 16% = 4.344, 18% = 4.078; PV of Rs. 1 at 8th year 16% = 0.305, 18% = 0.266 Show Answer

Q76) Z Ltd. is planning for issue of 15% Debentures of Rs. 100 each, redeemable at par after 5 year Rs. They are expected to be sold at par. Flotation cost is 10% of face value. Corporate tax is 35%. Cost of debentures on the basis on present value of future cash flow shall be - Use following rates for your calculations: PV of Rs. 1 for 1 to 5 years - 12% = 3.605, 13% = 3.517; PV of Rs. 1 at 5th year - 12% = 0.567, 13% = 0.543 Show Answer

Q77) Ramola Ltd. report its NOPAT Rs. 25,00,000. Its capital employed and economic value added is Rs. 60,00,000 & Rs. 19,00,000 respectively. What is overall cost of capital of Ramola Ltd. Show Answer

Q78) Mr. Investor, purchases an equity share of growing company, ATT Ltd. for Rs. 210. He expects that the ATT Ltd. to pay dividend of Rs. 10.5, Rs. 11.025 & Rs. 11.575 in year 1, 2 & 3 respectively. He expects to sell shares at the end of year 3 at Rs. 243.10. Determine the growth rate in dividend. Show Answer

Q79) Mr. Lucky, purchases an equity share of growing company, XYY Ltd. for Rs. 525. He expects that the XYY Ltd. to pay dividend of Rs. 26.25, Rs. 27.83 & Rs. 29.50 in year 1, 2 & 3 respectively. He expects to sell shares at the end of year 3 at Rs. 607.75. What is the required rate of return of Mr. Lucky on his equity investment? Show Answer

Q80) Mumbai Ltd. expected to pay dividend at Rs. 2 for the next year. As the company is a market leader with good future, dividend is likely to grow by 5% every year. The equity shares are now treaded at Rs. 80 per share in the stock exchange. Tax rate applicable to the company is 50%. The capital structure of the company also contains debt on which interest is payable @ 14%. The capital structure has ratio of Equity & Debt 80:20. WACC = Rs. Show Answer

Q81) Beeta Ltd. has furnished the following information: Earnings Per Share (EPS) Rs. 14; Dividend Payout Ratio 25%; Market Price Per Share Rs. 140; Rate of Tax 26%; Growth rate of dividend 9%. The company wants to raise additional capital of Rs. 10 lakhs including debt of Rs. 4 lakhs. Cost of debt (before tax)is 12% up toRs. 2 lakhs and 14% beyond that. Compute the marginal weighted average cost of additional capital Show Answer

Q82) National Ltd. has 12,000 equity shares of Rs. 100 each. Sale price is equity share Rs. 115 per share; flotation cost Rs. 5 per share. Expected dividend growth rate is 5% and expected dividend at the end of the financial year is Rs. 11 per share. What is the cost of equity shares of National Ltd. Rs. Show Answer

Q83) Raman Ltd. has 10% Preference Share Capital of Rs. 4,50,000. Face value is Rs. 10. Issue price of preference share is Rs. 100 per share; flotation cost Rs. 2 per share. What is the cost of preference shares to Raman Ltd. Rs. Show Answer

Q84) Raja Ltd. has 8% Debentures (Face value Rs. 2,500) of Rs. 9,00,000 which are redeemable at 5% premium, sold at 98%, 3% flotation costs with maturity of 20 year Rs. Corporate tax rate is 35%. The company paid debenture interest of 60,000 out of total interest payable of 72,000. After tax cost of debt is - Show Answer

Q85) Equity shares of Anuradha Ltd. are quoted in stock exchange at Rs. 325 per share. New issue priced at Rs. 312.5 and flotation cost will be Rs. 12.5 per share. During 5 years dividend on equity shares have steadily grown from Rs. 26.5 to Rs. 35.48. Dividend at the end of current year is expected at Rs. 37.5 per share. It has retained earning of Rs. 30,00,000. Corporate tax is 35% and shareholders are in tax slab of 20%. Ignore dividend tax. Calculate cost of equity and cost of retained earnings? Show Answer

Q86) Compute the EVA with the help of following information: Equity 10,00,000; Debt (10%) 5,00,000; Profit after tax 2,00,000. Risk-free rate of return is 7%. Beta (p) = 0.9, Market rate of return = 15%. Applicable tax rate is 40%. Show Answer

Q87) The company proposes to issue 11 year 15% debentures of Rs. 500. Yield on debentures of similar maturity and risk class is 16%; flotation cost 3% of face value. Corporate tax is 35%. Issue price and after tax cost of debt would be - Show Answer

Q88) A Company has Rs. 180 Million of 10% Debentures having face value of Rs. 100. The debentures are redeemable after 3 years and interest is paid annually. The current ex-interest debenture market value is Rs. 103. Pre-tax cost of debentures on the basis of present value of future cash flow shall be - Use following rates for your calculations: PV of Rs. 1 for 1 to 3 years - 8% = 2.577, 9% = 2.531; PV of Rs. 1 at 3rd year - 8% = 0.794. 9% = 0.772. Show Answer

Q89) R & G Company has equity share capital (2,00,000 shares) Rs. 20,00,000. The company's share has current market price of Rs. 27.75 per share. The expected dividend per share in next year is 50% of the 2019 EPS. The EPS of the last 4 years is as follows. The past trends are expected to continue. Year - 2016, EPS - 1.974; Year - 2017, EPS - 2.211; Year - 2018, EPS - 2.476; Year - 2019, EPS - 2.773. Calculate the cost of ordinary equity. Show Answer

Q90) The Company can issue 14% new debenture. The company's debenture is currently selling at Rs. 98. Face value of debenture is Rs. 100. The company's marginal tax rate is 50%. What is cost of debenture - (i) based on book value; (it) based on market value? Show Answer

Q91) Ganesh Ltd. requires amount of Rs. 5,00,000 to finance a project. It was decided to raise such finance by issue of debentures. Cost of debt is 10% (before tax) up to Rs. 2,00,000 and 13% (before tax) beyond that. Tax rate is 30%. What is the average marginal cost of capital of new finance of Rs. 5,00,000? Show Answer

Q92) C Ltd. wishes to raise additional finance of Rs. 20 lakhs for meeting its investment plans. C Ltd. has Rs. 4,00,000 in the form of retained earnings available for investment purposes. Further details are: Debt equity ratio 25:75. Earnings per share, Rs. 12. Dividend payout 50% of earnings. Expected growth rate = 10%. Market price per share = Rs. 60. Tax rate = 30%. Shareholder's personal tax rate = 20%. Cost of debt at the rate of 10% (before tax) up to Rs. 2,00,000 and 13% (before tax) beyond that WACC = Rs. Show Answer

Q93) Gentry Motor, Inc. a producer of turbine generator, is in this situation: EBIT = Rs. 40 lakhs Tax rate = 35%; Debt outstanding = Rs. 20 lakhs Kd = 10%; Ke = 15%; Shares outstanding = 6,00,000 shares. What is the Gentry's earning per share (EPS) and market price per share (Po) Rs. Show Answer

Q94) A company is planning to raise Rs. 20,00,000 additional long-term funds to finance its additional capital budget of the current year. The debentures of the company to be sold on a 14% net yield basis to the company, and equity shares to be sold at Rs. 50 per share net to the company, are the alternatives being considered. The company expects to pay dividend of Rs. 5 per share at the end of coming year. The required rate of return is 16%. Determine the growth rate of the company which market is anticipating. Show Answer

Q95) The required rate of return is 16%. Management is anticipating 8% growth rate. The company expects to pay dividend of Rs. 5 per share at the end of coming year. On this basis, at what price should the equity share be sold by the company? Show Answer

Q96) The prevailing risk-free rate of interest in 10-Year GOI Treasury Bonds is 5.5%. The average risk premium is 8%. The beta of the company is 1.1875. The beta of project is 1.4375. The debt can be raised at an interest rate of 9.5% up to first Rs. 10 Crore and @ 10% for the rest of the amount. Tax rate is 35%. You are required to calculate cost of equity and debt. Projects Rate of Return: A - 17.4%; B - 16.0%; C - 14.2%; D - 13.7%; E - 10.7%. Which projects should Priyanka Ltd. accept? Show Answer

Q97) The prevailing risk-free rate of interest in 10-Year GOI Treasury Bonds is 5.5%. The average risk premium is 8%. The beta of the company is 1.1875. The company now wants to take up a project requiring an investment of Rs. 75 Crore with a debt-equity ratio of 20%. The beta of this project is 1.4375. The debt can be raised at an interest rate of 9.5% up to first Rs. 10 Crore and @10% for the rest of the amount. Find out the marginal cost of capital, if the tax rate is 35%. Show Answer

Q98) Cost of equity and preference capital of Priyanka Ltd. are 17.43% & 10%. Before tax cost of debentures and term loan are 12% & 15%. Applicable tax rate is 30%. Ratio of weight in capital structure is 5:2:3:5 of Equity, Preference, Debt & Term Loan respectively. Priyanka Ltd. has following investment opportunities that are typical average risk projects for the company: Show Answer

Q99) Capital structure of S Ltd. is as under: 6% Debentures (Rs. 100 each) 2,00,000; 7% Debentures (Rs. 100 each) 1,00,000; 8% Pref. shares (Rs. 100 each) 2,00,000; Equity shares (Rs. 100 each) 4,00,000; Retained earnings 1,00,000. EPS of the company in the past many years has been Rs. 15. Equity shares are sold at Rs. 125. Tax rate is 30% and shareholders' personal tax liability is 10%. Find out WACC of the company on book value basis. Show Answer

Q100) Shares of Alfa Ltd. are currently being quoted at a price earnings ratio of 7.5 times. Retained earnings of the company being 37.5% is Rs. 6 per share. Compute company's cost of equity if investors' expected annual growth rate is 8%. Show Answer

Q101) If expected rate of return on equity shares is 1596, dividend just paid is Rs. 10 per share and expected annual growth rate is 1096 then at what price share will trade in market at the end of year one? Show Answer

Q102) A Ltd. gives following details: Equity Capital [Rs. 10 each] Rs. 2,50,000; Market value per share Rs. 20; Debentures [Rs. 100] Rs. 1,00,000; Market value per debenture 125; Interest rate 1096; WACC based on market value = Rs. Show Answer

Q103) B Ltd. gives following details: Equity Capital [Rs. 10 each] Rs. 5,00,000; Market value per share Rs. 12; Dividend per share Rs. 2.88; Debentures [Rs. 100] Rs. 2,50,000; Market value per debenture 80; Interest rate 896. WACC based on market value = Rs. Show Answer

Q104) Krishna Ltd. is currently financed with Rs. 10,00,000, 796 bonds and Rs. 20,00,000 of common stock. The stock has a beta of 1.5, risk-free rate of return 496 and market risk premium 3.596. The marginal tax rate for a company of this size is 3596. Compute the WACC of Krishna Ltd. on book value basis? Show Answer

Q105) Apoorva Ltd. has assets of Rs. 32,00,000 that have been financed as follows: Equity shares (Rs. 100 each) 18,00,000; General reserve 3,60,000; Debt 10,40,000. For the year ended the company's total profits before interest and taxes were Rs. 6,23,000. Company pays 896 interest on borrowed capital and the tax bracket is 4096. The market value of the equity is Rs. 150 per share. From the above, determine the weighted average cost of capital using market values as weights. Show Answer

Q106) ABC Ltd. has 10,000 shares of Rs. 7 each, Rs. 10,000, 1296 debentures and Rs. 20,000 as short term loan @ 1096. Tax rate for the company is 3096. Assume the cost of equity capital as 2096. Calculate WACC at book value. Show Answer

Q107) Mohan Ltd. has paid increasing dividends of Rs. 0.54, Rs. 0.58, Rs. 0.62, Rs. 0.67 and Rs. 0.72 a share over the past 4 years, respectively. Firm estimates that future increases in their dividends will be comparable to the arithmetic average growth rate over these past 4 year Rs. The stock is currently selling for Rs. 38.60 a share. The risk-free rate is 4% and the market risk premium is 8%. What is your best estimate of cost of equity if their beta is 1.22? Show Answer

Q108) What is the overall (weighted average) cost of capital in the following situation? The firm has Rs. 12 million in long-term debt, Rs. 2 million in preferred stock, and Rs. 8 million in common equity - all at market values. The before-tax cost for debt, preferred stock, and common equity forms of capital are 8%, 9%, and 15%, respectively. Assume 40% tax rate. Show Answer

Q109) Equity dividend expected at the end of year is Rs. 20 per share whereas anticipated dividend growth rate is 5%. Corporate tax is 30%. Market price per share is Rs. 200. What is cost of equity? Show Answer

Q110) Dividend per share is Rs. 15 and sell it for 1120 and floatation cost is Rs. 3, then component cost of preferred stock will be - Show Answer

Q111) If future return on common stock is 19% and rate on T-bill is 11% then current market risk premium will be: Show Answer

Q112) Stock selling price is Rs. 65, expected dividend is Rs. 20 and cost of common stock is 42% then expected growth rate will be - Show Answer

Q113) Dividend per share is Rs. 18 and sell it for 1122 and floatation cost is 14, then component cost of preferred stock will be: Show Answer

Q114) Stock selling price is Rs. 45, an expected dividend is Rs. 10 per share and an expected growth rate is 8%, then cost of common stock would be: Show Answer

Q115) Interest rate is 12% and tax savings (1-0.40) then after-tax component cost of debt will be - Show Answer

Q116) Cost of common stock is 14% and bond risk premium is 9% then bond yield will be - Show Answer

Q117) Cost of common stock is 16% and bond yield is 9% then bond risk premium would be - Show Answer

Q118) Cost of capital of company plays an important role in deciding the capital structure of a company. Show Answer

Q119) Which of the following statement is not correct ? Show Answer

Q120) Purpose of long term finance includes: Show Answer

Q121) Factors determining long term finance needs of a company includes: Show Answer

Q122) Sources of long term finance includes: Show Answer

Q123) Which of the following is not the part of ownership capital Rs. Show Answer

Q124) Which of the following forms the part of borrowing capitalRs. Show Answer

Q125) .....................represents the investment made by the owners of the business. Show Answer

Q126) .....................represents the investment made by the preference shareholders. Show Answer

Q127) .....................enjoy preference over payment of dividend. Show Answer

Q128) .....................represents the earnings not distributed to shareholders. Show Answer

Q129) Debenture holders have voting rights and there is a dilution of ownership Show Answer

Q130) Debentures can be: Show Answer

Q131) Term loans from banks include loan from: Show Answer

Q132) Loan from finahcial institutions include loan from: Show Answer

Q133) Which of the following statement is not correct ? Show Answer

Q134) Cost of capital is the rate of return that a firm .....................earn on its project investments to maintain its market value and attract funds Show Answer

Q135) .....................is the rate of return the firm required from investment in order to increase the value of the firm in the market place. Show Answer

Q136) Cost of capital is used to make: Show Answer

Q137) Factors affecting cost of capital can be: Show Answer

Q138) Which of the following factor is not the controllable factor affecting the cost of capital: Show Answer

Q139) Which of the following factor is the non- controllable factor affecting the cost of capital: Show Answer

Q140) Tax rate does not affect the cost of capital of company Show Answer

Q141) Capital structure of the company affects the cost of capital of company. Show Answer

Q142) Tax rates and interest rates prevailing in economy are the non-controllable factor that affects the cost of capital of company Show Answer

Q143) .....................refers to the cost of long term debentures/bond Show Answer

Q144) Cost of Debt is calculated Show Answer

Q145) If the cost of debt for Cowboy Energy Services is 10% (effective rate) and its tax rate is 40% then Kd is: Show Answer

Q146) If the cost of debt for Rainbow Services is 15% (effective rate) and its tax rate is 20% then Kd is: Show Answer

Q147) Jain & Co sells a new issue of 6% irredeemable debentures to raise Rs. 100,000 and realizes the full face value of Rs. 100. The company falls in 40% tax bracket. Debts are issued at par. Find Cost of Capital Show Answer

Q148) Classic Industries sells a new issue of 8% irredeemable debentures to raise Rs. 1,00,000 and realizes the full face value of Rs. 100. The company falls in 20% tax bracket. Debts are issued at par. Find Cost of Capital Show Answer

Q149) Jain & Co sells a new issue of 6%, 1000 irredeemable debentures of Rs. 100 each @ 10 % premium. The company falls in 40% tax bracket. Find Cost of Capital Show Answer

Q150) Classic Industries sells a new issue of 8%, 1000 irredeemable debentures of Rs. 100 each @ 20 % premium. The company falls in 20% tax bracket. Find Cost of Capital Show Answer

Q151) Jain & Co sells a new issue of 6%, 1000 irredeemable debentures of Rs. 100 each @ 10% discount. The company falls in 40% tax bracket. Find Cost of Capital Show Answer

Q152) A firm issues debentures worth Rs. 1,00,000 and realizes Rs. 98,000 after allowing 2% commission to brokers. They carry an interest rate of 10% and are due for maturity at the end of 10th year. The company has 40% tax bracket. Calculate cost of debt after tax. Show Answer

Q153) X Limited issues its Bond at par @ Rs. 1,000 per bond. These bonds will mature after 20 years at par and bears coupon rate of 10%. Coupons are annual. The bond will sell for par but flotation costs amount to Rs. 50 per bond. What is the after-tax cost of debt for X LimitedRs. Show Answer

Q154) Which of the following statement is correct ? Show Answer

Q155) Preference shares can be Show Answer

Q156) .....................are those shares issuing by which the company has no obligation to pay back the principal amount of the shares during its lifetime Show Answer

Q157) .....................are those shares whose dividends will get accumulated if they are not paid Show Answer

Q158) Calculate the cost of 10% preference capital of 10,000 preference shares whose face value is Rs. 100. The market price of the share is currently Rs. 115. Show Answer

Q159) A limited company issues 8% preference shares which are irredeemable. The face value of share is Rs. 100 but they are issued at Rs. 105. The floatation cost is f 3 per share, calculate case of capital. Show Answer

Q160) A company issues 10,000, 8% preference shares of Rs. 100 each redeemable after 20 years at face value. The floatation costs are Rs. 3 per share find case of capital. Show Answer

Q161) .....................are the last claimant on the profits of the company. Show Answer

Q162) .....................is the minimum rate of return that a company must earn on the equity financed portion of its investments in order to maintain the market price of the equity share at the current level. Show Answer

Q163) Ke = Rf + f3(Rm - Rf) is a formula to calculate cost of equity as per: Show Answer

Q164) Calculate the cost of equity capital for a company whose Risk-free rate =10%, equity market required return =18% with a beta of 0.5. Show Answer

Q165) Calculate the cost of equity capital for a company whose Risk-free rate = 8%, equity market required return =15% with a beta of 0.4. Show Answer

Q166) Given, the yield on debt is 10% and the risk premium as 5%, calculate the cost of equity. Show Answer

Q167) Given, the yield on debt is 12% and the risk premium as 2%, calculate the cost of equity. Show Answer

Q168) As per ....................., a judgmental risk premium to the observed yield on the long-term bonds of the firm is added to get the cost of equity Show Answer

Q169) A company has issued 5,000 equity shares of Rs. 100 each. Its current market price is Rs. 95 per share and the current dividend is Rs. 4.5 per share. The dividends are expected to grow at the rate of 6%. Compute the cost of equity capital Show Answer

Q170) Capital structure can vary according to changing requirements of the firm Show Answer

Q171) Ke = E1 / Po is a formula to calculate cost of equity as per: Show Answer

Q172) A company has currently 10,000 equity shares of Rs. 100 each and its’ earnings are Rs. 150,000. Its’ current market price is Rs. 112 and the growth rate of EPS is expected to be 5%. Calculate the cost of equity Show Answer

Q173) Kritika Limited is currently financed with Rs. 1,000,000 of 7% bonds, and Rs. 2,000,000 of common stock. The stock has a beta of 1.5, and the risk free rate is 4%, and the market risk premium is 3.5%. The marginal tax rate for a corporation of AKL’s size is 35%. What is Kritika Limited WACCRs. Show Answer

Q174) The firm is not required to pay dividends on retained earnings, so it may be argued that the retained earnings have no cost. Show Answer

Q175) There is an opportunity cost involved in the firms retaining the earnings and an estimation of this cost may be taken up as a measure of cost of capital of retained earnings. Show Answer

Q176) The cost of retained earnings are often taken as equal to the ..................... Show Answer

Q177) The weighted average cost of capital (WACC) is the .....................of the costs of different components of the capital structure of a firm. Show Answer

Q178) .....................is calculated after assigning different weights to the components according to the proportion of that component in the capital structure Show Answer

Q179) A company has currently 10,000 equity shares of Rs. 100 each and its’ earnings are Rs. 180,000. Its’ current market price is Rs. 198 and the growth rate of EPS is expected to be 10%. Calculate the cost of equity Show Answer

Q180) The weights are said to be book value weights if the proportion of different sources are ascertained on the basis of the………………… Show Answer

Q181) The weights to be used for calculation of WACC can be : Show Answer

Q182) .....................can be defined as the cost of additional capital introduced in the capital structure Show Answer

Q183) Information costs both increase the marginal cost of capital and reduce the internal rate of return on investment projects. Show Answer

Q184) Depreciation expenses involve no direct cash outlay and can be safely ignored in investment project evaluation. Show Answer

Q185) The marginal cost of capital will be less elastic for larger firms than for smaller firms. Show Answer

Q186) In practice, the component costs of debt and equity are jointly rather than independently determined. Show Answer

Q187) Investments necessary to replace worn-out or damaged equipment tend to have low levels of risk. Show Answer

Q188) Weighted cost of capital is not the accepted discounting rate for evaluating investment decisions Show Answer

Q189) ABC Ltd. has expected earnings at Rs. 30 per share which is growing at 8% annually. Company follows fixed payout ratio of 50%. The market price of its share is Rs. 300. Find the Current cost of equity Show Answer

Q190) ABC Ltd. has expected earnings at Rs. 30 per share which is growing at 8% annually. Company follows fixed payout ratio of 50%. The market price of its share is Rs. 300. Find the Cost of new equity if the firm issues fresh shares at current market price but with floatation cost of 5% Show Answer

Q191) The Mountaineer Airline Company has consulted with its investment bankers and determined that they could issue new debt with a yield of 8%. If Mountaineer' marginal tax rate is 39%, what is the after-tax cost of debt to Mountaineer Rs. Show Answer

Q192) Funds required for a business may be classified as long term and short term. Show Answer

Q193) For an investment to be worthwhile, the expected return on capital must be greater than the cost of capital Show Answer

Q194) Rama Company issued 1,20,000 10% debentures of Rs. 10 each at a premium of 10%. The costs of floatation are 4%. The rate of tax applicable to the company is 55%. Complete the cost of debt capital Show Answer

Q195) Suraiya Limited issued 4,000 12% preference shares of Rs. 100 each at a discount of 5%. Costs of raising capital are Rs.8,000. Compute the cost of preference capital Show Answer

Q196) In weighted average cost of capital, a company can affect its capital cost through Show Answer

Q197) Cost of common stock is 13% and bond risk premium is 5% then bond yield would be Show Answer

Q198) The cost of equity capital is all of the following except: Show Answer

Q199) To compute the required rate of return for equity in a company using the CAPM, it is necessary to know all of the following except: Show Answer

Q200) In calculating the costs of the individual components of a firm's financing, the corporate tax rate is important to which of the following component cost formulas Rs. Show Answer

Q201) If the CAPM is used to estimate the cost of equity capital, the expected excess market return is equal to the: Show Answer

Q202) Peter’s Audio Shop has a cost of debt of 7%, a cost of equity of •11 %, and a cost of preferred stock of 8%. The firm has 104,000 shares of common stock outstanding at a market price of $20 a share. There are 40,000 shares of preferred stock outstanding at a market price of $34 a share. The bond issue has a total face value of $500,000 and sells at 102% of face value. The tax rate is 34%. What is the weighted average cost of capital:
for Peter’s Audio Shop Rs.
Show Answer

Q203) Cameron Industries is expected to pay an annual dividend of $1.30 a share next year.
The market price of the stock is $24.80 and the growth rate is 3 percent. What is the firm’s cost of equityRs.
Show Answer

Q204) The cost of equity capital is all of the following except: Show Answer

Q205) Continuing above question, the firm has 18,000 equity shares of Rs. 100 each outstanding and the current market price is Rs. 300 per calculate the market, value weighted average cost of capital assuming that the market values and book values of the debt and preference capital are same Show Answer

Q206) You are given the following facts about a firm:
1. Risk free rate of return is 11 %.
2. Beta co-efficient of the firm is 1.25.
Compute the cost of equity capital using Capital Asset Pricing Model (CAPM) assuming a market return of 15 percent next year.
Show Answer

Q207) Weighted average cost of capital represents an averaging of all risks of the company and can be used to evaluate investments Show Answer

Q208) The return on the Strand Corporation’s stock is relatively volatile as reflected by the company’s beta of 1.8. The return on the S&P 500 is currently 12% and is expected to remain at that level.
Treasury bills are yielding 6.5%. Estimate Strand’s cost of retained earnings.
Show Answer

Q209) Periwinkle Inc. paid a dividend of $1.65 last year and its stock is currently selling for $33.60 a share. The company is expected to grow at 7.5% indefinitely. Estimate the firm’s cost of retained earnings. Show Answer

Q210) The cost of equity is Show Answer

Q211) The weighted average cost of capital at book value is Show Answer

Q212) Present value of dividend for the first year is Show Answer

Q213) Present value of dividend for the second year is Show Answer

Q214) Present value of dividend for the third year is Show Answer

Q215) Total present value of dividend received in fourth and fifth year Show Answer

Q216) Total present value of the share Show Answer

Q217) Cost of equity is Show Answer

Q218) Cost of debenture is Show Answer

Q219) Cost of preference shares is Show Answer

Q220) Weighted average cost of capital is Show Answer

Q221) The value of the firm if the debt is increased by Rs 2,00,000 Show Answer

Q222) Value of firm if the debt is decreased by Rs 2,00,000 Show Answer

Q223) Cost of equity when debt is decreased by 2,00,000 Show Answer

Q224) Cost of equity when debt is increased by 2,00,000 Show Answer

Q225) The weighted average cost of capital for a firm is the : Show Answer

Q226) Using the CAPM to calculate the cost of capital for a risky project assumes that : Show Answer

Q227) Which one of the following statements is correct concerning the weighted average cost of capital (WACC) ? Show Answer

Q228) Flotation costs should : Show Answer

Q229) The cost of equity capital is all of the following EXCEPT : Show Answer

Q230) In calculating the proportional amount of equity financing employed by a firm, we should use : Show Answer

Q231) In calculating the costs of the individual components of a firm's financing, the corporate tax rate is important to which of the following component cost formulas ? Show Answer

Q232) The common stock of a company must provide a higher expected return than the debt of the same company because Show Answer

Q233) A quick approximation of the typical firm's cost of equity may calculated by Show Answer

Q234) The cost of capital for a firm -- when we allow for taxes, bankruptcy, and agency costs - Show Answer

Q235) Market values are often used in computing the weighted average cost of capital because Show Answer

Q236) For an all-equity financed firm, a project whose expected rate of return plots should be rejected. Show Answer

Q237) The ___ is the proportion of earnings that are paid to common shareholders in the form of a cash dividend. Show Answer

Q238) The weighted average cost of capital for a firm is the Show Answer

Q239) Which one of the following statements is correct concerning the weighted average cost of capital (WACC) Show Answer

Q240) Flotation costs should Show Answer

Q241) A critical assumption of the net operating income (NOI) approach to valuation is : Show Answer

Q242) Retained earnings are Show Answer

Q243) Factors affecting capital structure includes Show Answer

Q244) X Ltd has issued 1000 equity shares of 100 each as fully paid up. The market price of these shares is Rs 200 per share. The company has paid a dividend of Rs 15 per share. Find out the cost of equity share capital. Show Answer

Q245) X Ltd has issued 1200 equity shares of Rs 100 each as fully paid up. The market price of these shares is Rs 160 per share. The company has paid a dividend of Rs 10 per share. Find out the cost of equity share capital. Show Answer

Q246) Z Ltd has issued 2,000 equity shares of Rs 100 each (Rs 2,00,000) at a premium of Rs 3 per share. The cost of issue is Rs 5 per share. The net earnings after tax is rs 10 per share. Calculate the cost of new equity share capital. Show Answer

Q247) Given :
Equity share capital = Rs 1,00,000
Stock = Rs 50,000
Cash = Rs 10,000
Debentures = Rs 50,000
Find out the capital gearing ratio Show Answer

Q248) Calculate the market price of a share under Walter's Formula :
Earning per share = Rs 5
Dividend per share = Rs 3
Cost of capital = 16%
Internal Rate of return = 20%
Retention ration = 40% Show Answer

Q249) External short term consists- Show Answer

Q250) Monika & Co. issued 8% 100 Preference share of Rs 100 each and have incurred the following expenses underwriting commission 3% Brokerage 2%. Find out the cost of capital- Show Answer

Q251) Rahul & Co. issued 500, 7% Preference shares of Rs 10 each at par. The expenses of issues are underwriting commission 2%. Brokerage 1% and printing Rs 50. The company is subject to a tax of 50%. Find out cost of capital after tax - Show Answer

Q252) Rahul Ltd. has issued 500 equity shares of Rs 100 each at a premium of 5%. The cost of issue is Rs 5 per share. The net earning after tax are Rs 10 per share. Compute the cost of new capital - Show Answer

Q253) Kiran Ltd. issues 10,000 10% debentures of Rs 100 each at a discount of 5%. The cost of flotation are 2%. The rate of tax applicable to the company is 50%. Find the cost of debt capital before tax ? Show Answer

Q254) Kiran Ltd. issues 10,000 10% debentures of Rs 100 each at a discount of 5%. The cost of flotation are 2%. The rate of tax applicable to the company is 50%.
Find out the cost of debt capital after tax- Show Answer

Q255) A company issue 1000 debentures (10%) of Rs 100 each at 10% premium redeemable at par after five years. The company's tax rate is 50%. Find out the cost of debt before tax- Show Answer

Q256) A company issue 1000 debentures (10%) of Rs 100 each at 10% premium redeemable at par after five years. The company's tax rate is 50%.
Find out the cost of debt after tax- Show Answer

Q257) The rate of dividend of preference share is decided at the time of Show Answer

Q258) The dividend paid on preference shares is not deductible expenditure for Show Answer

Q259) The cost of preference share capital is after tax which can be converted into - Show Answer

Q260) For calculating the cost of preference share capital the dividend of preference shares is divided by ___ and multiplied by 100. Show Answer

Q261) The rate of dividend on equity share is not- Show Answer

Q262) Every equity shareholder expects return from the - Show Answer

Q263) The expected rate of equity shareholders is the cost of - Show Answer

Q264) Dividend yield method of cost of equity share capital is based on this assumption that - Show Answer

Q265) The limitation of dividend yield method are - Show Answer

Q266) Earnings yield method of cost equity share capital is based on this assumption that the - Show Answer

Q267) Earning per share of X Ltd are Rs 9 and the market price of a share of face value of Rs 100 is Rs 150. Find out the cost of equity share capital. Show Answer

Q268) Dividend yield + Growth in dividend Method is based on the assumption that the equity shareholder is not satisfied with ___ but he expects an increase in it every year. Show Answer

Q269) Dividend yield + Growth in dividend method, cost of equity share capital is calculated with the adjustment of the increase in the __. Show Answer

Q270) Ankit Ltd. Company's shares are quoted in the market at Rs 20 currently. The company pays a dividend of Rs 1 per share and the investors expect a dividend growth rate of 5% per share. Find out the company's cost & capital- Show Answer

Q271) Find out the cost of retained earnings from the following information-
Dividend per share = Rs 900
Personal income tax rate = 25%
Personal capital gain tax rate = 10%
Market price per share Rs 100 Show Answer

Q272) Find out of retained earnings from the following data -
Dividend per share Rs 15
Personal income tax rate 25%
Market price per share Rs 110
Brokerage on investment of dividend 2% Show Answer

Q273) The cost of depreciation fund is calculated according to- Show Answer

Q274) Assuming that a firm pays tax at a 50 percent rate. Compute the after tax cost of capital in case of 8.5% preference share sold at par. Show Answer

Q275) Assuming that R.H.D. firm pays tax at 50%. Compute the after tax cost of capital in case of perpetual bond sold at par, coupon rate of interest being 7 percent. Show Answer

Q276) Assuming that R.D.H. firm pays tax at 50%, compute the after tax cost of capital in case A 10 years 8%, Rs 1000 per ICICI bond sold at Rs 950 less 4 percent underwriting commission. Show Answer

Q277) Assuming that Goyal firm pays tax at 50% compute the after tax cost of capital in case. A preference share sold at Rs 100 with 9% dividend and a redemption price of Rs 110 if the company redeems it in five years. Show Answer

Q278) Assuming that a firm pays tax at a 50%, compute the after tax cost of capital in case. An ordinary share selling at a current market price of Rs 120 and paying a current dividend of Rs 9 per share which is expected to grow at a rate of 8 percent. Show Answer

Q279) Assuming that a firm pays tax at a 50% rate, compute the after tax cost of capital in case of an equity share of a Radhika Company which engage no external financing is selling for Rs 50. The earning per share is Rs 7.50 of which sixty percent is paid in dividends. The company reinvest retained earnings at a rate of 10 percent. Show Answer

Q280) Determine the cost of equity capital of the company. Show Answer

Q281) Determine the estimated market price of the equity shares if the anticipated growth rate of the firm (a) rise to 8% (b) falls to 3%. Show Answer

Q282) Determine the market price of the company's shares assuming a growth of 20%. Show Answer

Q283) The cost of capital is the minimum required rate of earning or the cut off rate for capital expenditure. This statements is given by Show Answer

Q284) Cost of capital is the rate of return the firm required from investment in order to increase the value of the firm in the market rate. This statement defined by- Show Answer

Q285) The concept of cost of capital can also be explained in terms of ___ cost. Show Answer

Q286) Assertion (A) : Cost of capital is the rate of return on the best alternative investment opportunities available to a business concern.
Reason (R) :A rate of return, which a company can earn by investing its surplus funds outside the business, will be called its cost of capital. State which one of the above is true. Show Answer

Q287) Cost of capital is the borrowing rate. This statement is- Show Answer

Q288) The concept of cost of capital is very important from which points of view ? Show Answer

Q289) Rama Ltd. wishes to issue 1000, 7% debentures of Rs 100 each for which the expense of issue would be Rs 5 per debenture. Find out the cost of debenture. Show Answer

Q290) D company has issued 6% debentures of Rs 100 each, at a discount of 10% repayable after 10 years. Fund out the cost of debenture ? Show Answer

Q291) G Ltd. has issued 1000 equity shares of Rs 100 each at fully paid up. It has earned a profit of Rs 10000 after tax. The market price of the shares is Rs 160 per share. Find out the cost of equity capital. Show Answer

Q292) Compute the cost of capital of Shyam Ltd.who pays tax at 50% when 8.5% preference share sold at par. Show Answer

Q293) Compute the cost of capital of Shyam Ltd. who pays tax at 50% when irredeemable debentures sold at par with coupon rate of invest being 7%. Show Answer

Q294) Compute the cost of capital of Shyam Ltd. who pays tax at 50% when 10 years 8% Rs 1000 each debentures sold at Rs 950 less 4% underwriting commission. Show Answer

Q295) Cost of capital refers to : Show Answer

Q296) Which of the following sources of funds has an implicit Cost of Capital ? Show Answer

Q297) Which of the following has the highest cost of capital ? Show Answer

Q298) Cost of Capital for Government securities is also known as : Show Answer

Q299) Cost of Capital for Bonds and debentures is calculated on : Show Answer

Q300) Weighted Average Cost of Capital is generally denoted by : Show Answer

Q301) Which of the following cost of capital require tax adjustment ? Show Answer

Q302) Which is the most expensive source of funds ? Show Answer

Q303) Marginal cost of capital is the cost of : Show Answer

Q304) In case of firm is all-equity financed, WACC would be equal to : Show Answer

Q305) In case of partially debt-financed firm, k0 is less Show Answer

Q306) In order to calculate Weighted Average Cost of weights may be based on: Show Answer

Q307) Firm's cost of Capital is the average cost of : Show Answer

Q308) An implicit cost of increasing proportion of debt is : Show Answer

Q309) Cost of Redeemable Preference Share Capital is : Show Answer

Q310) Which of the following is true ? Show Answer

Q311) Cost of Capital may be defined as : Show Answer

Q312) Minimum rate of return that a firm must earn in order to satisfy its investors, is also known as : Show Answer

Q313) Cost of Capital for Equity Share Capital does not imply that : Show Answer

Q314) Cost of capital is ___. Show Answer

Q315) ___ security is known as variable income security. Show Answer

Q316) Quick asset does not include ___ Show Answer

Q317) Long term finance is required for ___. Show Answer

Q318) ___ is the minimum required rate of earnings or the cut off rate of capital expenditure Show Answer

Q319) X Ltd issues rupees 50,000 8% debentures at a discount rate of 5%. The tax rate is 50% the cost of debt capital is ___. Show Answer

Q320) The mix of debt and equity in a firm is referred to as the firm's ___. Show Answer