HI, any one let me know,how to calculate,cost of capital, let say, patranic will pay in cash on 31 july 2009 (two years after acquisition)$2.42 per acquired share of sadonic patronic’s cost capital is 10% per annum. Answer $1 compound of two years at 10% would be worth $1.21 How to calculate or how to get this value?
I think it should be 1/(1+0.1) to the power of 2 (for two years) So first you calc 1+0.1=1.1 Then 1.1 to the power of two= 1.21, after which 1/1.21= 0.826446281 Multiply 0.826446281 by (2.42* the number of shares acquired) to get the present value.