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Short term Debt Average Interest on short term Debt Interest paid on Short term debt @ 3.52% Total Interest Cost Interest Cost for Long Term Debt Total Long Term Debt Cost of Debt before tax consideration Earning Before Tax Amount paid as tax Tax Rate Effective Cost of Debt
$1,425,000,000.00 3.52% $50,160,000.00 $524,000,000.00 $473,840,000.00 $6,629,000,000.00 7.15% $4,089,000,000.00 $1,260,000,000.00 30.81% 4.95%
EPS $4.01 Price of Share at 31st Dec, 2005 $52.56 Equity Capital Raised if share sold on 31st of Dec, 2005 $49.93 Cost of Equity Capital 8.03% Number of Equity Shares 854,900,000 Total Shareholders equity ###
7.62%
Since there liability to equity ration is high, for funding a new project they should 1) think about raising money through equity They should invest in funds which have a rate of return higher then cost of equity for 2) the above mentioned reason