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Cost of Retained Earning (in Hindi)
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Calculation of Cost of Retained Earning.

Heena Malhotra
Believe in Conceptual Learning.

Unacademy user
mam calm concept given by whoom mam bathayi pls
mam mlz tell me.. is typ k qution exam m nhi aata h na???
Mam, not clearly understand about D0 to D1 conversion. Mam please explain any other way for me only.
tax ka concept clear ni hua mam..
Heena Malhotra
10 months ago
Dekho, equity shareholders walo ko jab dividend milta h to unhe personal taxes pay krne pdte h, to uss case m retained earning cost of equity ke equal nhi hogi. aur formula m video m aapko bta chuki hu. I hope ab clear ho gya hoga ☺️☺️
Sheetal dhamija
10 months ago
thank you mam
  1. Cost of Capital By Heena Malhotra


  2. Cost of Capital Cost of Retained Cost and Weight Earning Cost of Combination of Cost of Equity Cost of Debt Preference Share of each sources of Capital Weighted Average Cost of Capital (WACC) By Heena Malhotra


  3. Cost of Retained Earning o ke (D1/Po-flotation cost)+g By Heena Malhotra


  4. in absence of any information on personal taxt) ost of Retained Earnings (K E Cost of Equity Shares f there i ny iformation on personal tax t) By Heena Malhotra


  5. ABC Company provides the following details: D,- 4.19 P,- 50 g=5% Calculate the cost of retained earnings. SOLUTION Di -Do(1 + g) Po 74.19(1+0.05) +0.05 0 Po 0 50 = 0.088 + 0.05 = 13.8% By Heena Malhotra


  6. o D1-4.194(4.19*5%) o D1-D0(1+g) By Heena Malhotra


  7. ABC Company provides the following details R! = 796 =1.20 Rm-Rf = 6% Calculate the cost of retained earnings based on CAPM method SOLUTION = 7% + 1.20 (696) = 796 + 7.20 = 14.2% K. By Heena Malhotra


  8. COST OF RETAINED EARNINGS O Like another source of fund, retained earnings involve cost. It is the opportunity cost of dividends foregone by shareholders. O The cost of retained earnings is often used interchangeably with the cost of equity, as cost of retained earnings is nothing but the expected return of the shareholders from the investment in shares of the company. However, sometime cost of retained earnings remains below the cost of equity due to saving in floatation cost and existence of personal tax. By Heena Malhotra


  9. Cost of Capital Cost of Retained Cost and Weight Earning Cost of Combination of Cost of Equity Cost of Debt Preference Share of each sources of Capital Weighted Average Cost of Capital (WACC) By Heena Malhotra


  10. Cost of Irredeemable Debentures The cost of debentures which are not redeemed by the issuer of the debenture is known as irredeemable debentures. Cost of debentures not redeemable during the life time of the company is calculated as below: Cost of Irredeemable Debenture (K) 1t NP Where, KCost of debt after tax Annual interest payment Net proceeds of debentures or current market price tTax rate NP By Heena Malhotra


  11. Cost of Irredeemable Preference Shares PD Cost of lredeemable Preference Share (K)- Where, PD - Annual preference dividend P Net proceeds in issue of preference shares By Heena Malhotra


  12. COST OF EQUITY SHARE CAPITAL-Methods O Dividend price basis O Dividend price plus growth basis O Earning/price basis O Earning/price plus growth basis O Realised Yield basis O CAPM By Heena Malhotra


  13. Earning basis 8 Cost of equity E/Po By Heena Malhotra


  14. Earning growth basis 8 Cost of equity Ete) +g By Heena Malhotra


  15. Realised Yield Method O The realised rate of return is the discount rate which equates the present Value of the dividends received in the past five years o plus the present value of sale price to the purchase price. By Heena Malhotra


  16. Capital Asset Pricing Model (CAPM) Where, - Cost of equity capital = Risk free rate of return Ke Rm (R.-R) = Beta coefficient Rate of return on market portfolio Market premium = By Heena Malhotra