Cost o Capital CoC7

LOs(a) Sources

Yreeence Stock Debts

Common S t r

Pe dividend Sntorest
CyDividend
Fixed
Not lived kd. = koke.
KP overql cost
weighted ANg s E
ke
WACC
Com/onnt Cost

Soures AmOunt weight k(1:) wACC

ODO00 0 25 20 Ke 5 (0-25*20 )
Equty
00000 025 1 8 ke 4:s (0-25 xl8 )
Pre O 50 12)kd 6 (o-50 x 127)
20000bo
Dets
Exish e 4oo000 -57wnce/ ko/ ke.
c a r s t n f c t

m CC
O0000 0-25 200000 = O 5o
mavginal OXto caprtat
o0000 yo0000

Highet Piskly t eauty Pael Debts

kekp> kd
DOO0O 155/.
=
155 o0
9-9 want toraive 100000

xkp t WA kd
WACC W Mke = + W
aritalisation Rate
Discouting Rake Hurdle Rat
 EBIT l0oD
Los(6 Tax 3nt 20
EBT
Jntet
Dividend Tax
Yey iis ekforde
No EXfenSe EAT
aryopnation o diuiderdisot
ePere

Tar uull not al Ke kr. Ceauity areß) butit ulll augect kd (det
E9kd z(l-t) CLecmuveitisaropnation because it
kd: 1D (IO 30 Ta deduchable).
kd1
E9 -kd- I(1-t)
kd-1o C1 0-40)
kd 61.
o Tax wsto(af
Tan -0-3o te 0 4o
COC 1 o 6/

Los(c)- Hoo to calulati kd 9 (costo, Dobt)

CALte Ta)

kd kdI(1 t)
CPLeL Tax) mtix Pn a bg
(Aer Bejove Tax)
YTm o, New marginol Dest
Credt
Comfamble dtbt -$ame matumty, Same atin9, same month YTm
9n EquityThese is IRR
*9n ond Thete is yTm.
Kd 4Tm (1-T)
Ater
Tax
belorc
Tax
 YTm u nothing but I/
PV
FV
PMT
N
YTm
cPT I/y

Losa) Non colable | Non convertible fae{sh (kP)

Eg-o au prel stoch tat pays 8 5D dividnd per share
kr Paediv x/00 Seu jor 4100per sh. uhat is kr
mP KP 8 SD XIO0 8 S-/

1ostCost ° Eqty(ke2 systematic tisk

CAm k e = RF+P (RnR),(markettisk rumium)

Bond Yield +Pish Pramium Bond yield +Rist fremium

Diutdend D$countmdel (Dom) =ke - D xl0o+9

Po(me).
DI DOCI+9)|ee ROE
(apital faiing Model
CAPM Aset Rato
DoT existing div, 0 - Noxtyrexpdiv
T
Rod (1- T)
Numericals
K OACC Ate Tax
1ya0caf wighy
X 45 = I8
7-5-1 8
Bondly yo-l-040
Prel S 0-05 x 1 0-55 Xg5 0:55
5/
ComS S5/. 0 55 5/ 825 -25
o 6/. 06
Bonds aleot Tax
Pres o ms doesnos alleet Tax
Bond
0-yoXy-5 |8 (STO)incalc
O-55 $rO 2
Pres O05 1 e

ComS0 55 X15- 8'25 (STO3)

10 6
2+RCL 3.-
RCLI 4RcL
 WA CC
2 Sources k
0-1- (10-1- - yoq- 6 ) 1-8 (STo 1)
3o-debt (o-30)
201-res (o20) 11 2-2 (STo2)

501ocom s (0-50) 8- 7 (STo3)

13-0/
Tax yO/ Taxon ly allecty Debt)
8t2-2+9 13/

S3) Sour C w K wACC

30-1-pcht 0-30 x 52 56
1D-P S 010 x 2 2
GolComs.0-60 x l-5-
I116 5
Debts 8 1 . - 35 a 5-2/.

ua) SouraJ W ACC

welght
Debt 58m (58 GI) 0-09 3-18- 0-28
Pre s 23m (28GI1)-04 x -21. 0-28
Coms 525m (525 611) O-85 x 8 0/ 6-8
Total cafital 611m
7-36

weaght isbased on Market Valute

Debt Atei Tax 5-2) -yol 3-18.
CTaxyo:)
Note-I mVb Bv u ven then alloays mv is sureio