Doubt in FM

Financial Management

What value of debenture and preference shares should be used to determine cost of debt and cost of preference share capital? Sale value or market value ??

Kiran Singh Thakur

CA Inter

★ 14K+

12-Mar-23 10:31

641

Answers (4)

If u look at the formula,u will find that the interest after tax/net proceeds.net proceeds means what we will get in hand if we issue the share.thats why we take market value

Gokul Nath

CA Inter

★ 605

12-Mar-23 13:49

For WACC weights purpose - Market value.

CA Suraj Lakhotia

Admin

12-Mar-23 16:04

CA Suraj Lakhotia Admin

For WACC weights purpose - Market value.

Sir can't we assume sale price as issue price and derive net proceeds by deducting flotation cost form it (issue price )?

Thread Starter

Kiran Singh Thakur

CA Inter

★ 14K+

12-Mar-23 22:21

for WACC weights, we would take market values only.

CA Suraj Lakhotia

Admin

13-Mar-23 19:29