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Cost of Irredeemable Preference Capital is:
AI × (1 − t) / NP
BPD × (1 − t) / NP
CPD / NP
D(PD + RV) / NP
Answer & Solution
Correct answer: C. PD / NP
1. Kp (irredeemable) = Preference Dividend / Net Proceeds.
2. No tax shield because preference dividend is post-tax.
3. NP = issue price less issue expenses.
_Source: ICAI BoS CA Inter Paper 6A, Ch 4 "Cost of Capital", §6_