Ura Limited issues 4000, 12% preference shares of Br 100 each. Costs of raising the capital...

Transcribed Image Text:

Ura Limited issues 4000, 12% preference shares of Br 100 each. Costs of raising the capital is Br 800. Compute the cost of preference capital. Compute the cost of capital of a preferred share sold at Br 100 with 8% dividend. Your company share is quoted in the Addis Exchanges at Br 40. The company pays a dividend of Br 5 per share and the market expects a growth rate of 7.5% per year: a) Compute the company's equity cost of capital. b) If the anticipated growth rate is 10%, calculate the indicated market price per share. c) If the company's cost of capital is 15% and the anticipated growth rate is 10%, calculate the indicated market price assuming Br 5 dividend per share is to be maintained Ura Limited issues 4000, 12% preference shares of Br 100 each. Costs of raising the capital is Br 800. Compute the cost of preference capital. Compute the cost of capital of a preferred share sold at Br 100 with 8% dividend. Your company share is quoted in the Addis Exchanges at Br 40. The company pays a dividend of Br 5 per share and the market expects a growth rate of 7.5% per year: a) Compute the company's equity cost of capital. b) If the anticipated growth rate is 10%, calculate the indicated market price per share. c) If the company's cost of capital is 15% and the anticipated growth rate is 10%, calculate the indicated market price assuming Br 5 dividend per share is to be maintained

Answer rating: 100% (QA)

a Cost of Preference CapitalTotal amount raised through preference shares 4000 x Br 100 Br 400000Cos... View the full answer