Calculate Weighted average cost of capital from the following using a) book value method b) Market Value method
1) Equity Share capital Rs. ₹ 3,50,000/- with cost of Equity @ 10% market value is ₹ 4,50,000/-
2) 8% Preference shares of ₹ 4,00,000/- and its market value is Rs. ₹ 4,50,000/-
3) 6% Debt of ₹ 6,00,000/- and its market value is ₹ 5,60,000/-
4) Retained earnings ₹ 1,50,000/- which has no change in the market value . It cost is equal to that of cost of Equity. Can you please send the Reply .
Discussion on Calculating Weighted Average Cost of Capital Using Book and Market Value Methods with Retained Earnings Query Clarification A user inquired about calculating the weighted average cost of capital using both book and market value methods, providing specific financial data. The query received five replies, primarily suggesting that the user attempt the calculation independently using management accounting formulas, with offers to validate the results. One respondent noted the forum's focus on legal issues rather than financial calculations. The original poster later requested clarification on a specific point regarding retained earnings, indicating they had attempted the calculation but needed further assistance. (AI Summary)
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