A company has the following long term capital outstanding on 31 March 2009:
(a) 10 per cent debentures with a face value of Rs 500000. The debentures were issued in 2002 and are due on 31 March 2009. The current market price of a debenture is Rs 950.
(b) Preference shares with a face value of Rs 400000. The annual dividend is Rs 60 per share.
(c) Sixty thousand ordinary shares of Rs 10 par value. The share is currently selling at Rs 50 per share. The dividends per share for the past several years are as follows:
|
Year
|
Rs
|
Year
|
Rs
|
|
2002
|
2.00
|
2006
|
2.80
|
|
2003
|
2.16
|
2007
|
3.08
|
|
2004
|
2.37
|
2008
|
3.38
|
|
2005
|
2.60
|
2009
|
3.70
|
Assuming a tax rate of 35 per cent, compute the firm's weighted average cost of capital.