i.You have only debt and common equity. The interest rate is 10% at current capital structure of

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i.You have only debt and common equity. The interest rate is 10% at current capital structure of 55% debt and 45% common equity. You paid last dividend as Rs.2, the growth rate is expected as 4%, and the price of the stock is Rs.20. Tax is 40%. Two investment opportunities are available; Y with a rate of return of 15%, and Z with a return of 12%. There is an equal risk pertains to each opportunity. (03)

a. Calculate cost of equity?

b. Calculate the WACC?

c. Which opportunity should you accept?

Posted Date: May 18, 2024 01:04 PM

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i.You have only debt and common equity. The interest rate is 10% at current capital structure of

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