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The image provided contains a problem related to calculating the weighted average cost of capital (WACC). Here’s the extracted information and how we can approach the solution:

### Problem Statement:
**Sunrise Ltd has the following capital structure:**
- **Equity (expected dividend 12%)**: ₹10,00,000
- **10% Preference Share Capital**: ₹5,00,000
- **8% Loans**: ₹5,00,000

**You are required to calculate the weighted average cost of capital, assuming 50% as the rate of income tax before and after tax.**

### Steps to Solve:

1. **Calculate the Cost of Each Component**:
   - **Cost of Equity (Ke)**: The cost of equity is often calculated using the dividend discount model (assuming constant dividends).
     \[
     Ke = \frac{D1}{P0} \text{ where } D1 = \text{Dividend per share}
     \]
     However, if we assume dividends as a percentage of the market value:
     \[
     Ke = 12\%
     \]
   - **Cost of Preference Shares (Kp)**: This is the dividend rate on preference shares.
     \[
     Kp = \frac{\text{Preference Dividend}}{\text{Preference Share Capital}} = 10\%
     \]
   - **Cost of Debt (Kd)**: This needs to be adjusted for the tax rate since interest on debt is tax-deductible.
     \[
     Kd = \text{Interest Rate} \times (1 - \text{Tax Rate}) = 8\% \times (1 - 0.50) = 4\%
     \]

2. **Determine the Weights of Each Component**:
   - **Total Capital = ₹10,00,000 + ₹5,00,000 + ₹5,00,000 = ₹20,00,000**
   - **Weight of Equity**:
     \[
     We = \frac{10,00,000}{20,00,000} = 0.50
     \]
   - **Weight of Preference Shares**:
     \[
     Wp = \frac{5,00,000}{20,00,000} = 0.25
     \]
   - **Weight of Debt**:
     \[
     Wd = \frac{5,00,000}{20,00,000} = 0.25
     \]

3. **Calculate the Weighted Average Cost of Capital (WACC)**:
   \[
   WACC = (We \times Ke) + (Wp \times Kp) + (Wd \times Kd)
   \]
   Substituting the values:
   \[
   WACC = (0.50 \times 12\%) + (0.25 \times 10\%) + (0.25 \times 4\%)
   \]
   \[
   WACC = 6\% + 2.5\% + 1\% = 9.5\%
   \]

### Final Answer:
The weighted average cost of capital (WACC) for Sunrise Ltd is **9.5%**.

Would you like any more details or have any questions about this calculation? Here are five related questions to deepen your understanding:

1. How does the tax rate impact the cost of debt in WACC calculations?
2. What assumptions underlie the use of the Dividend Discount Model (DDM) for calculating the cost of equity?
3. Why is WACC considered an important metric in capital budgeting?
4. How would the WACC change if the company’s equity increased relative to debt?
5. What are the implications of using book value vs. market value weights in WACC calculations?

**Tip:** When calculating WACC, always remember to adjust the cost of debt for taxes, as interest expenses reduce taxable income.

Sunrise Ltd has the following capital structure: Equity (expected dividend 12%): ₹10,00,000; 10% Preference Share Capital: ₹5,00,000; 8% Loans: ₹5,00,000. You are required to calculate the weighted average cost of capital, assuming 50% as the rate of income tax before and after tax.

This page provides a detailed solution for calculating the Weighted Average Cost of Capital (WACC) for Sunrise Ltd, including the cost of equity, preference shares, and loans, adjusted for a 50% income tax rate. Suitable for finance students.

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