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a) ZZTech Berhad is seeking your financial advice to determine the firms cost of long term financing. The following data are relevant to your task:

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a) ZZTech Berhad is seeking your financial advice to determine the firms cost of long term financing. The following data are relevant to your task: i) Issue bond with 12 percent coupon and the floatation cost is 5 percent of the market value of RM1,125. The maturity period is 10 years and the company tax rate is 35 percent. (4 marks) ii) Issue additional common stock with the latest dividend paid was RM1.05. The current market price of the stock is RM25. The expected floatation cost is 9 percent of the market price. The dividend growth is 5 percent. (3 marks) iii) Issue additional preferred stock, which pays 7 percent dividend on the par value of RM100. The market price from the new issue is expected to be RM85 per share. (3 marks) iv) Justify the best alternative for ZZTech Berhad. (2 mark)

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