Cost of capital — OpenTuition Forums

Kkrishna389816y ago

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?

please any one let me know.
Thanks.
krishna3898

Aaccastudent11016y ago#1

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.