Cost of Capital Quiz

Janaki Ltd issued 12000 10% Debentures of Rs 100 each at par. The tax rate is 50%. Calculate after tax cost of debt.

• 3%

• 5%

• 4%

• 6%

The market price of an Equity share is Rs 80. The expected Equity dividend is Rs 6.40 per share. The shareholders anticipate a growth of 8% in dividends. Calculate cost of equity capital.

• 12%

• 14%

• 16%

• 18%

_________are the last claimant on the profits of the company

• Equity shareholders

• Preference shareholders

• Debentureholders

• Creditors

Weighted Average Cost of Capital is generally denoted by:

• Ka

• Kw

• Ko

• Kc

Which is lower for a company?

• Cost of Debt

• Cost of Equity

• Cost of Retained earning

• Cost of Raw materials

In weighted average cost of capital the term “weight” refers to

• Rate of rate interest

• Portion of total capital raised by the firm

• Income tax consideration

• Proportion of each source of capital raised

Kr stands for

• Cost of retained earnings

• Cost of preference capital

• Cost of debts

• Cost of equity capital

The market price per share of Mobile Glycols Limited is Rs 125. The dividend expected per share a year hence is Rs 12 and the DPS is expected to grow at a constant rate of 8 percent per annum. What is the cost of the equity capital to the company?

• 17

• 6

• 1.6

• 18

What is existing cost of capital?

• 8.75%

• 11%

• 12%

• 10%

What is the revised cost of capital for S Ltd?

• 8.75%

• 11%

• 10%

• 12%