1. **Stating the problem:** Calculate the following financial metrics for Ola Electric for the year ended March 31, 2025: - Cost of Debt - Cost of Financial Loan - Cost of Equity - Cost of Preference - Cost of Retained Earnings - Overall Cost of Capital - WACC at Book Value and Market Value (market price Rs 40) 2. **Formulas and explanations:** - Cost of Debt (Kd) = $ \frac{\text{Finance Cost}}{\text{Total Debt}} $ (approximate) - Cost of Financial Loan = same as Cost of Debt here (finance cost related to loans) - Cost of Equity (Ke) can be approximated by $ \frac{\text{Net Income}}{\text{Shareholders' Equity}} $ (negative here, so interpret carefully) - Cost of Preference = Not given explicitly, assume 0 if no preference shares - Cost of Retained Earnings = same as Cost of Equity - Overall Cost of Capital (WACC) = $ \frac{E}{V} \times Ke + \frac{D}{V} \times Kd \times (1 - T) $ where $E$ = equity, $D$ = debt, $V = E + D$, $T$ = tax rate (assumed 0 here) 3. **Given data from statements:** - Finance Cost (2025) = 141,339 - Net Income (2025) = -2,546,988 (loss) - Shareholders' Equity (Book Value) = 7,141,533 - Market Price per share = 40 (given) - No explicit debt value given, approximate debt from loan and borrowings changes or assume debt = 0 for simplicity 4. **Calculations:** - Cost of Debt (Kd): Finance cost / Debt. Debt not explicitly given, but loan and borrowings change is (46,018). Assume debt = 46,018 for approximation. $$Kd = \frac{141,339}{46,018} \approx 3.07 = 307\%$$ This is unusually high, indicating data limitations. - Cost of Financial Loan = same as Kd = 307% approx. - Cost of Equity (Ke): Net Income / Shareholders' Equity $$Ke = \frac{-2,546,988}{7,141,533} \approx -0.3567 = -35.67\%$$ Negative due to net loss. - Cost of Preference: No data, assume 0. - Cost of Retained Earnings = Cost of Equity = -35.67%. - Overall Cost of Capital (WACC): Assuming debt (D) = 46,018, equity (E) = 7,141,533, total value $V = E + D = 7,187,551$. Tax rate $T = 0$ (no tax data). $$WACC = \frac{E}{V} \times Ke + \frac{D}{V} \times Kd \times (1 - T)$$ $$= \frac{7,141,533}{7,187,551} \times (-0.3567) + \frac{46,018}{7,187,551} \times 3.07$$ $$= 0.9936 \times (-0.3567) + 0.0064 \times 3.07$$ $$= -0.3543 + 0.0196 = -0.3347 = -33.47\%$$ - WACC at Market Value: Market value of equity = Market price $\times$ number of shares. Number of shares not given, approximate shares = $\frac{Shareholders' Equity}{Book Value per share}$. Assuming book value per share = $\frac{7,141,533}{\text{unknown shares}}$, insufficient data. Without shares, approximate market value of equity = given market price $\times$ shares unknown, so use book equity as proxy. Hence, WACC at market value approximately same as book value WACC = -33.47%. 5. **Summary:** - Cost of Debt $\approx 307\%$ (approximate, likely overestimated) - Cost of Financial Loan $\approx 307\%$ - Cost of Equity $\approx -35.67\%$ (loss) - Cost of Preference = 0 (no data) - Cost of Retained Earnings $\approx -35.67\%$ - Overall Cost of Capital (WACC) $\approx -33.47\%$ - WACC at Market Value $\approx -33.47\%$ (approximate) Note: Negative costs and very high cost of debt indicate financial distress or data limitations.