(a)A bond per warrant package priced to sell at a par value of RM1,000. Each bond comes with 50 attachable warrants. A warrant gives the owner the right to buy 1 share at RM20 per share. The value of a warrant has been estimated at RM2. The bonds mature in 20 years. If the yield to maturity is 10 percent, calculate the bond's annual coupon payment.

(b)Armani Berhad and Ardeena Berhad are identical in every respect except that Armani Berhad is unlevered while Ardeena Berhad has RM2,000,000 of 5 percent debt outstanding. Assume that all of the Modigliani and Miller assumptions are met, the Earnings Before Interest and Tax (EBIT) is RM1,500,000 and the cost of equity to Armani Berhad is 18 percent. Determine:

1. Weighted Average Cost of Capital (WACC).
2. New Weighted Average Cost of Capital (WACC) if the tax rate is 38 percent.