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Cost of capital

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Cost of capital

  • This topic has 1 reply, 2 voices, and was last updated 12 years ago by accastudent110.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • June 14, 2010 at 6:36 am #44672
    krishna3898
    Member
    • Topics: 4
    • Replies: 25
    • ☆

    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

    June 14, 2010 at 8:25 am #64216
    accastudent110
    Member
    • Topics: 6
    • Replies: 36
    • ☆

    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.

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