The following capital structure is extracted from Delta Ltd”s balance sheet as on 31 March 2008: (Rs…

The following capital structure is extracted from Delta Ltd’s balance sheet as on 31 March 2008:

                                                                            (Rs ’000)  

                 Equity (Rs 25 par)                                  66,412   

                 Reserves                                                 65,258   

                 Preference (Rs 100 par)                            3,000   

                 Debentures                                              30,000   

                 Long-term loans                                        5,360   

                                                                               170,030  

      The earnings per share of the company over the period 2004–2008 are:

          Year                    Rs                     Year                     Rs             

             2004                  2.24                   1994                   4.40           

             2005                  3.00                   1995                   5.15           

             2006                  4.21                   1996                   5.05           

             2007                  3.96                   1997                   6.00           

             2008                  4.80                   1998                   6.80           

      The equity share of the company is selling for Rs 50 and preference for Rs 77.50. The preference dividend rate and interest rate on debenture respectively are 10 per cent and 13 per cent. The long-term loans are raised at an interest rate of 14 per cent from the financial institution. The equity dividend is Rs 4 per share.

      Calculate the weighted average cost of capital for Delta Ltd, making necessary assumptions.