A us mnc has its susidary in india. the subsidiaryhas issued 15 percent prefrence shares of the face value of Rs.100, to be redeemed at year end 9.

A us mnc has its susidary in india. the subsidiaryhas issued 15 percent prefrence shares of the face value of Rs.100, to be redeemed at year end 9. flotation costs are expected to be 5 percent ; these costs can be amortized for tax purpose during 8 years at a uniform rate. the corporate tax is 35 percent. determine the costs of preference shares from the prespective of the subsidiary