Weighted Marginal Cost of Capital for Tecnet Steel Limited

Code : FAC0057

Year :
2020

Industry : Steel Industry

Region : Asia

Teaching Note:Available

Structured Assignment : Not Available

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Abstract: The case study ‘Weighted Marginal Cost of Capital for Tecnet Steel Limited’ discusses the various sources of capital available to the Tecnet Steel Limited (TSL) such as common equity, preference equity (convertible preference shares and irredeemable preference shares), and debt (bank loan, non-convertible debentures, and deep discount bond). The student/ learner is expected to put herself/himself in the shoes of a financial analyst and calculate the cost of each component of TSL’s capital and help the management of TSL to select the right project among the various options available by comparing the ROI of each project and the WMCC of TSL, which keep changing with the size of investment required.


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Pedagogical Objectives:

  • To understand the concept of WMCC

  • To understand how to estimate the cost of various components of Capital

  • To understand how to select the right project when WMCC changes with size of investment


    Keywords : Weighted Marginal Cost of Capital; Weighted Average Cost of Capital; Cost of various components of Capital; Cost of Convertible Preference Shares; Cost of Irredeemable Preference Shares; Cost of Deep Discount Bond; Cost of Non-Convertible Debentures; WMCC, WACC


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