rs CU eOr Ivers 15.CostofCa.. Q & Estimation of Growth Rate It.can be calculated as below: Growth (@) b= earnings retention rater fate of return on fund invested ‘Proportion of earnings available to equity shareholders which is not distributed as dividend 4) Questions ein XYZ & Co. issues 2,000 10% preference shares of © 100 each at ¢ 95 each ‘CALCULATE the cost of preference shares. SOLUTION PO ® Kee y= 10*2.000) 10 _ 91053 or 053% (@5> 2.000) "95. nin = If R Energy is issuing preferred stock at £100 per share, with a stated dlvidend of £12, and a floatation cot of 3% then, CALCULATE the cost of preference share? XYZ Ltd, issues 2000 10% preference shares of € 100 each at € 95 each. The ‘company proposes to redeem the preference shares at the end of 10" yer from the dote of issue, CALCULATE the cost of preference share? ‘A company has paid dividend of € 1 per share of face value of © 10 each) last year ‘and it is expected to grow @ 10% every year. CALCULATE the cost of equity if the ‘market price of share is €55