Dom epistasis i
Dom epistais ii
Only works for recessive mutations
Complementation: mutate in diff.
genes and the child is not affected
Criticism of MM approach MM approach consists of certain criticisms also. The
following are the major criticisms of MM approach.
107 MM approach assumes that tax does not exist. It is not applicable in the
practical life of th
Where, P = Market price of an equity share D = Dividend per share r = Internal
rate of return E = Earning per share Ke = Cost of equity capital Exercise 5 From the
following information supplied to you, ascertain whether the firm is f
= 5882.35 (or) 5883 The firm should issue 5883 new shares @ Rs. 102 per share to
finance its investment proposals. Exercise 4 Z Ltd., has risk allying firm for which
capitalization rate is 12%. It currently has outstanding 8,000 shares selling at Rs.
= 0 + P1 = 151.20 P1 = Rs. 18.
Exercise 2 Ram company belongs to a risk class for which the appropriate
capitalization rate is 12%. It currently has outstanding 30000 shares selling at Rs.
100 each. The firm is contemplating the declaration of dividend
P1 = Rs. 112
Calculation of number of new shares to be issued
Dividends Paid Dividends not Paid Net Income 300000 300000 Total Dividends
Retained Earnings 120000 300000 Investment Budget 600000 600000
Amount to be raised a
I N (1 t)
Where, Kd = Cost of debt capital I = Annual interest payable Np = Net proceeds of
t = Tax rate Exercise 5 (a) A Ltd. issues Rs. 10,00,000, 8% debentures
at par. The tax rate applicable to the company is 50%. Compute the cost of
+ 2,00,000 18750 19,25,000 = 11.36%.
After Tax Cost of Debt Kdb
= Kda (1t) =11.36 (10.55) =5.11%.
Cost of Preference Share Capital Cost of preference share capital is the annual
preference share dividend by the net proceeds from the sale of preference s
(c) Kda =
(d) Kda =
(1 t), Np= Rs. (10,00,000 + 1,00,000)
= 90,000 10,78,000
= 4.17% = 11,00,000 22,000 = Rs. 10,78,000
Cost of Perpetual Debt and Redeemable Debt It is the rate of return which