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Eq sh cap = rs40lac RnS = rs60lac EPS = 7.50 Ke = 15%, Kre = 12.5% Why we do consider ke = kre = 15% ?
Answers (11)
Angel Maria Varghese
Normally Ke will be higher than Kre. Only when floatation cost is not given, Kre=Ke
But how is it equal, kre is 12.5%, ke 15% Then why we consider equal ?
Thread Starter
Sushmita ChowdhuryBut how is it equal, kre is 12.5%, ke 15% Then why we consider equal ?
Question number and source material details please
Sriram Somayajula Admin
Which book, please?
A friend of mine asked me this qsn, I was unable to solve it so posted it here
Thread Starter
Sushmita ChowdhuryA friend of mine asked me this qsn, I was unable to solve it so posted it here
In the solution they took kre = ke = 15% But according to my calculation kre 12.5%, as per the formula Is there any diff concept regarding market value wacc as related to the qsn ?
Sriram Somayajula Admin
Also, how did you arrive at KRE as 12.5%
Eps/mv x100 = kre 7.50/60 x100 = 12.5%
Thread Starter
Sushmita ChowdhuryEps/mv x100 = kre 7.50/60 x100 = 12.5%
I’m soo sorry Sir, it’s my calculation mistake :(
Thread Starter
Sushmita ChowdhuryI’m soo sorry Sir, it’s my calculation mistake :(
As per the information provided Ke = EPS/MPS x 100 = 7.5/50 x 100 = 15% As there No floatation costs Kre = Ke = 15%
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