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KK ltd has issued a 10-year ksh 9,600,000 11% debenture at ksh 9,400,000. The debenture...

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Finance

KK ltd has issued a 10-year ksh 9,600,000 11% debenture at ksh 9,400,000. The debenture is redeemable at a premium of 6%. It has also issued a new 13% preferred stock with a par value of ksh.560 at a discount of 8%. The common stock of the company is currently selling for ksh. 225.00 a share and currently paying a dividend of ksh 9.50 per share. The dividends are expected to grow at a rate of 4% per year. The corporation tax rate is 30%.

Required:

Calculate the cost of: Debt capital; Preference share capital; and ordinary share capital.

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