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COST OF CAPITAL
Preference shares (kp)
Example 1
Company A has in issue 15% preference shares with a par
value of R100 each. The preference shares are not
redeemable and are currently trading at R98 each. Calculate
the cost of the preference shares.
kp = D .
.
PV
= 100 x 15%
98
= 15.3%
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