6 BAC501/0 4. The summarised Statement of Financial Position of Dedak Berhad at 30 June 2017 was as follows. RM'000 RM'000 15,350 5,900 Fixed assets Current assets Creditors faling due within one year Net current assets 9% debentures (2,600) 3,300 (8,000) 10,650 Ordinary share capital (RMO 25 shares) 7% preference shares (RM1 shares) Share premium account Retained Earnings 2,000 1,000 1,100 6,550 10,650 The current price of the ordinary shares is RM1.35 ex dividend. The dividend of RM0.10 is payable during the next few days. The expected rate of growth of the dividend is 9% per annum. The current price of the preference shares is RM0.77 and the dividend has recently been paid. The debenture interest has also been paid recently and the debentures are currently trading at RM80 per RM100 nominal. Corporation tax is at the rate of 30%. Required (a) Calculate the company's weighted average cost of capital (WACC), using the respective market values as weighting factors. [15 marks] 91% a FO D. FIO + Prisc Insert Delete Fit FIR * - Il + Backspace 8 9 o P ] K L M M ? payable during the next few days. The expected rate of growth of the dividend is 3% per annum. The current price of the preference shares is RM0.77 and the dividend has recently been paid. The debenture interest has also been paid recently and the debentures are currently trading at RM80 per RM100 nominal. Corporation tax is at the rate of 30%. Required (a) Calculate the company's weighted average cost of capital (WACC), using the respective market values as welghting factors. [15 marks] (b) Assume that Dedak Berhad issued the debentures one year ago to finance a new investment Discuss the reasons why Dedak Berhad may have issued debentures rather than preference shares to raise the required finance. [8 marks] (c) Explain what services a merchant bank may have provided to Dedak Berhad in connection with the raising of this finance. [7 marks] END OF QUESTION PAPER c o 91% ) E Pr150 A nor Driate 2 8 9 O P j IK L Entor 5 N M Shits ALE Ctrl