The small tool company was recently formed to manufacture a new product. The company has the following capital structure in the beginning of the year…
BBS Fundamentals of Financial Management · 2079 · Solved Question with Answer
The small tool company was recently formed to manufacture a new product. The company has the following capital structure in the beginning of the year 2021.
| 13% Debenture of 2030 | Rs. 6 million |
| 8% Preference stock | Rs. 2 million |
| Common stock (80000 shares of Rs. 100) | Rs. 8 million |
| Total | Rs. 16 million |
The common stock sells for Rs. 200 a share on this data. Last year company paid divided of Rs. 20 per share and expected to grow at the rate of 10 percent. The company has a marginal tax rate of 40 percent.