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Q. Cost of Redeemable Preference Share Capital?

Cost of Redeemable Preference Share Capital: - Redeemable preference capital has to be returned to the preference shareholders subsequent to a stipulated period. The cost of redeemable preference share capital is computed as follows:

D + 1/n (RV -NP)

K_pr = n X 100

1/2 (RV +NP)

K_pr = Cost of Redeemable Preference Capital

D = Annual Preference Dividend

NP = Net Proceeds of Preference Share Capital

n = Number of years

RV = Redeemable Value of Preference Share Capital

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M9575406

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