Q.2 The following is the capital Structure of Maruti Itd.Sources of capitalBook valueMarket valueRs.40,00,00010,00,00030,00,00020,00,000Rs.80,00,000Equity shares of Rs. 100 each9% Cumulative preference shares of Rs. 100 each11 % DebenturesRetained Earnings12,00,00033,00,000ТОTAL1,00,00,0001,25,00,000Additional Information:1. For the last year the company had paid equity dividend at 25% and its dividend is likelyto grow 5% every year.2. The current market price of the company's equity share is Rs. 200.3. Corporate tax rate is 30% and shareholders personal income tax rate is 20%You are required to calculate:a) Cost of capital for each source of capital.b) Weighted average cost of capital on the basis of book value weights.c) Weighted average cost of capital on the basis of market value weights.

Cost of each source of capital Equity Cost of Equity= Expected dividend per share/Market value per…

Answered: Q.2 The following is the capital…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The company capital structure consist of debt 380000 @ 4.05%, common stock 220000@12.09% and preferred stock 400000 @ 19.50%, calculate company's weighted average cost of capital Select one: O a. 12.99% O b. 11% O c. 9.50% O d. None O e. 11.99%
The company capital structure consists of debt 250000 at 0.084, preferred stock 230000 at 11% and common stock 120,000 at 14%, calculate a company's weighted average cost of capital Select one: O a. 0.1051 O b. 0.0629 OC 0.0771 d. 0.0349 e. All the given choices are not correct
1 Following is the Balance sheet of Jay Limited: Liabilities Equity Shares of Rs. 10 each Retained Earnings } VESHUR 6% Preference Share of Rs.10 each General Reserve Debenture Redemption Fund 5% Debentures Sundry Creditors Total Liabilities Amoun Required: Calculate value per share by using following 1. Yield Method 2. Net Assets Method t 300,000 200000 Assets Fixed Assets Allowances for Depreciation 21 13303 90,000 880,000 200,000 Current assets 5,000 Preliminary Expenses Unwritten Off Discount 25,000 60,000 Amoun t 600,000 (75,000) 340,000 10,000 5,000 Total Assets Current Assets include investments of Rs.50,000 market price of which is Rs.90,000. Debtors included in current assets are doubtful to the extent of Rs.25,000 for which no provision has been made so far. Debenture interest owes for two years and preference dividends are in arrear for two years. Earnings before tax is Rs.280,000 and Tax rate is 35%. The normal rate of dividend is 20%. 880,000
36. From the data relating to M/s Kiran India Ltd., prepare Common Size Balance sheet: Particulars 2008 2009 Capital & Liabilities: Share capital 7% Debentures Creditors 13,16,000 4,50,000 84,000 1,56,000 20,06,000 14,00,000 4,00,000 1,00,000 2,00,000 21,00,000 Bank Overdraft 8. Assets: Fixed Assets 12,70,000 54,000 4,40,000 2,00,000 22,000 20,000 20,06,000 13,00,000 63,000 4,22,000 2,52,000 42,000 21,000 21,00,000 Cash Debtors Stock Prepaid Expenses B/R
Q18 If the company’s EBIT is OMR 500,000; market value of the equity is OMR 2,000,000 and value of Debt is OMR 4,000,000; then what is the overall cost of capital of the firm under Net Income Approach? a. 12.5% b. 10% c. 25% d. 8.33%
The company capital structure consists of debt 135000 at 6.05%, common stock 410000 at 10.09% and preferred stock 200000 at 11%, calculate company's weighted average cost of capital Select one: Oa. 8,59% O b.9.09% Oc. 9.59% O d. 7.59% Oe. None of the options
(a) Calculate current Ratio and Quick Ratio from the followinginformation:Total Assets Rs. 350000Fixed Assets Rs. 175000Investment Rs. 70000Fictitious Assets Rs. 5000Share holders fund Rs. 200000Long term Debts Rs. 100000Inventory Rs. 45000(b) From the following information calculate the stock turnoverratio.Sales Rs. 200000, G.P 25% on cost, Opening Stock was 1/3rd of thevalue of closing stock. Closing stock was 30% of sales
2.00,000 From the following information, calculate Capital Employed Ratio: $ Share Capital 14,00,000 4,00,000 2,00,000 9% Preference Shares Reserve and Surplus Surplus i.e., Balance in Statement of Profit and.Loss 10% Debentures (Long term) 1,50,000 5,00,000 Current Liabilities 3,00,000 Fixed Assets Land and Buildings 18,00,000 10,00,000 Current Assets 6,00,000 5,00,000 50,000 Inventories Trade Receivables Compute Return on Capital Employed Ratio.
Capital Structure components Debt (K) Weighted Cost Total Cost Weights 3.05 25% ? Common shares (K.) 7.15 55% ? Preferred Stock (K,) 9.33 20% ? Weighted Average FIND Cost of Capital
A.4 ABC Company has on its books the following amounts and specific costs of each type of capital: Type of Book Value Market Value Specific Costs Capital ($) ($) Debt Preference Equity Retained Earnings 600,000 1,000,000 800,000 2,000,000 480,000 1,100,000 900,000 3,000,000 (a)Book Value weights, and (b) Market Value weights (%) 5 4,400,000 5,480,000 Determine the weighted average cost of capital using 8 15 13
Question 1 The following information relates to a company listed on Luse- Mungwi PLC ZMK Issued share capital (1000 shares) Share premium. Reserves. Share holders funds. 6% Irredeemable Debentures. 9% Redeemable Debentures. Bank loan. Total Long Term Liabilities. Million 4 000 2 600 290 6,890 2,800 2,900 1 000 6 700 The current cum interest market value per k100 units is k103 and k105 fir the 6% and 9% Debentures respectively. The 9% Debenture is redeemable at par in 10 years time. The bank loan bears interest rate of 2% above the base rate (current base rate is 15%). The current ex-div market price of shares is k1, 100 and a dividend of K100 per share which is expected to grow at a rate of 5% per year has just been paid. The effective corporation tax rate for Mungwi is 30%. Required: A) Calculate the effective after tax weighted Average Cost of Capital (WACC) fir Mungwi PLC
The re-issuance of treasury stock for cash would be reported on a statement of cash flows under the following section: O Investing O Leases O Borrowing O Operarting O Bonds O Financing ASUS f4 f9 团 f5 f6 f7 f10 f11 & 4 6 Y U F G H. K V B N 08 因 5 %24

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