- This topic has 1 reply, 2 voices, and was last updated 12 years ago by
.
Viewing 2 posts - 1 through 2 (of 2 total)
- Posts
For the cost of preference shares, you are correct (although strictly it is D/Po where D is the dividend (preference shares are paid a constant dividend) and Po is the market value)
For the cost of debt, it is I(1-T)/Po (when the debt is irredeemable – T is the tax rate, because debt interest is tax allowable).
If the debt is redeemable then you need to calculate the IRR.
Viewing 2 posts - 1 through 2 (of 2 total)
- You must be logged in to reply to this topic.