Business Studies

X limited issued 10,000 equity shares of Rs.10 each at premium Rs.2 each. The company has incurred issue expenses of Rs.5,000. The equity shareholders expect dividend of $$18\%$$ then cost of capital is ____________.


ANSWER

$$15.65\%$$


SOLUTION
K$$_e$$ = $$\frac{D_1}{NP}$$
Where NP i.(E) Net Proceed of shares = $$\frac{1000 X12 - 5000}{10000}$$
Dividend of a share (D$$_I$$) = Rs. 1.8.
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