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6) Qalisya Dira Bhd is trying to calculate its cost of capital for use in a capital budgeting decision. The company plans to invest a

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6) Qalisya Dira Bhd is trying to calculate its cost of capital for use in a capital budgeting decision. The company plans to invest a total of RM 16 million next year. Mrs Cellina, the vice president of finance has given you the following information and has asked you to compute the weighted average cost of capital (WACC) for the company. The companv's present capital structure is as follows: For this reason, the firm can a) Issue a 12% preferred stock for RM 110 with RM 4 issuance cost. The par value of the preferred stock is RM100. b) Issue common stock for RM 19.50 per share. The dividend paid last year was RM 1.30 per share and is expected to grow at a constant rate of 10% a year. c) Sell RM1000 par value bonds with 11% annual coupon rate and 20 years maturity. The bond can be sold for RM 980 each and floatation cost of 3% of the par value will be incurred. The company expects to have retained earnings of RM12 million next years. Tax rate is 28%. REQUIRED: Calculate the cost of: i. Debt ii. Preferred stock iii. New common stock iv. Find the weighted average cost of capital (WACC)

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