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Match the following: List-I List-II 1. Cost of debt a. \(\frac{D+\frac{p-N}{n}}{(p+N)/2}\) 2. Cost of…

The matching is 1-c, 2-d, 3-a, 4-b. Debt cost uses the interest payment and redemption adjustment, while preference-share cost uses the preference dividend and redemption…

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Match the following:

List-IList-II
1. Cost of debta. D+p−Nn(p+N)/2\frac{D+\frac{p-N}{n}}{(p+N)/2}
2. Cost of equityb. Ke (1 – t)
3. Cost of preferencec. C+p−NPn(p+NP)/2\frac{C+\frac{p-NP}{n}}{(p+NP)/2}
4. Cost of retained earningsd. DpMp\frac{Dp}{Mp} + g

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Answer and explanation

Correct answer D

The matching is 1-c, 2-d, 3-a, 4-b. Debt cost uses the interest payment and redemption adjustment, while preference-share cost uses the preference dividend and redemption adjustment. Equity cost is dividend yield plus growth; the retained-earnings expression adjusts equity cost for the shareholder's tax.

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  • Telangana SET (TG SET)

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