Question: Uber Ltd. has the following book value capital structure: Sources Millions (Rs.) Equity Capital (10 million shares, Rs.10 par) 100 Preference Capital, 11% (100000 shares
Uber Ltd. has the following book value capital structure:
| Sources | Millions (Rs.) |
| Equity Capital (10 million shares, Rs.10 par) | 100 |
| Preference Capital, 11% (100000 shares Rs.100) | 10 |
| Retained earnings | 120 |
| Debentures, 13.5% (500000 debentures Rs.100) | 50 |
| Term loans 12% | 80 |
| 360 |
- The next expected dividend per share is Rs.1.50.
- The dividend per share is expected to grow at the rate of 7%.
- The market price per share is Rs.20.
- Preference stock, redeemable after 10 years, is currently selling for Rs.75 per share.
- Debentures, redeemable after 6 years are selling for Rs.80 per debenture.
- The tax rate for the company is 50%.
Calculate the weighted average cost of capital using:
- Book value proportions and
- Market value proportions.
Step by Step Solution
There are 3 Steps involved in it
1 Expert Approved Answer
Step: 1 Unlock
Question Has Been Solved by an Expert!
Get step-by-step solutions from verified subject matter experts
Step: 2 Unlock
Step: 3 Unlock
