Z Ltd.'s operating income (before interest and tax) is 9,00,000. The firm's cost of debt is 10 per cent and currently firm employs - 30,00,000 of…

CA Intermediate · Financial Management and Strategic Management · MTP · May 2025
Z Ltd.'s operating income (before interest and tax) is 9,00,000. The firm's cost of debt is 10 per cent and currently firm employs - 30,00,000 of debt. The overall cost of capital of firm is 12 per cent. What is the cost of equity.
(A) 13.3%
(B) 15.2%
(C) 16.0%
(D) 12.5%

Suggested Answer and Working Notes:

Correct Answer: Option (A)

13.3%

Topics: Part-A: Financial Management

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