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By,
Ravi Srivastava
Financial Management:
Meaning
Preference Shareholders
NP = Net Proceed at the time of issue of Preference
Shares
N = Life or Redemption Period.
Q. 1 A co. issued 20,000 12%
Preference Shares of Rs. 100 each at
par. Calculate Kp.
Here –
PD = 12% of ( 20,000 x Rs. 100)
= 2,40,000
NP = 2,00,000
2,40,000
Kp = ------------------ x 100
2,00,000
= 12%
Shares of face value Rs. 100 each carrying
14% dividend and realize Rs. 92 per share.
The shares are repayable after 12 years at
par. Calculate Kp.
Here:
PD = 14
NP = 92
RV = 100
14 + (100 – 92) / 12
Kp = ----------------------------- x 100
(100 + 92) / 2
= 15.27%
Thank You
Regards
Ravi Srivastava