Answered step by step
Verified Expert Solution
Question
1 Approved Answer
ANSWER THIS WITH SOLUTION FROM 1 TO 20 QUESTION ? 10. Complete the following template to assess the company's weighted average cost of capital (wacc)
ANSWER THIS WITH SOLUTION FROM 1 TO 20 QUESTION ?
10. Complete the following template to assess the company's weighted average cost of capital (wacc) and adjusted weighted average cost of capital (adj-wacc) of the existing capital structure. (6 marks) 8. Calculate the annual cost of capital of the motor vehicle. 9. Calculate the monthly instalment of the new business loan. 17. The IRR of the project is %. (1 mark) 18. The MIRR of the project is %. (1 mark) 11. Complete the following template to assess the company's weighted average cost of capital (wacc) and adjusted weighted average cost of capital (adj-wacc) with the additional business loan. (5 marks) 12. Calculate the project's Initial Outlay and Terminal Value. (2 marks) Initial Outlay: Terminal Value: 3. Calculate the annual cost of capital of bonds. (2 marks) 4. Calculate the annual cost of capital of the preferred stocks. (2 marks) 5. Calculate the annual cost of capital of the common stocks based on Constant Dividend Growth Model (CDGM). (2 marks) 6. Calculate the annual cost of capital of the business loan. (2 marks) 7. Calculate the annual cost of capital for the mortgage. (2 marks) Prepare MACRS 5-year convention for the machineries and determine the after-tax gain or loss on disposal cash flow/ tax savings. (5 marks) Construct a 6-year Pro-Forma Income Statement for the new project and determine the projected operating cash flows. (10 marks) Pro-forma Income Statement 13. Complete the following template to assess the project based on Capital Budgeting Methods. Assess the viability of the new project. (5 marks) 14. The Discounted Payback Period is (2 marks) 15. The NPV of the project is RM (2 marks) 16. The Profitability Index (PI) of the project is (2 marks) Capital Asset Pricing Model (CAPM) The company's beta is 1.9, whereas the cost of risk-free rate instrument is 3.15% and the average market cost of borrowing is 9.14%. The corporate tax is 24%, and the project will be assessed based on Capital Budgeting Techniques. The cost of capital of the project is based on the wacc of the proposed capital structure. Table 1: Interest Expenses [ The financing of the project will be through a 10-year business loan of RM10 million at a rate of 7.83% p.a. The loan will be an additional capital to the company's existing capital structure: 19. Based on Capital Asset Pricing Model (CAPM), calculate the expected required rate of return on the company. (2 marks) 20. Explain the criteria for the project to be accepted based on the return. (3 marks) This question paper consists of ONE (1) Section. Answer ALL questions in the question paper. [60 MARKS] CCC Berhad is assessing a new project which costs RM4.85 million, with additional equipment expenditure of RM0.8 million. The equipment will be depreciated based on MACRS, 5-year convention and to be sold at the termination of the project for 25% of the equipment cost. The 6-year project's sales revenue is RM5.6 million in the first year and increases by 4%, year on year. The fixed cost of the project is RM600,000 annually, and the manufacturing and operation cost will be 30% of the sales revenues. The company's interest expenses for the projects are estimated as follows, not including additional interest expense on the proposed financing. 10. Complete the following template to assess the company's weighted average cost of capital (wacc) and adjusted weighted average cost of capital (adj-wacc) of the existing capital structure. (6 marks) 8. Calculate the annual cost of capital of the motor vehicle. 9. Calculate the monthly instalment of the new business loan. 17. The IRR of the project is %. (1 mark) 18. The MIRR of the project is %. (1 mark) 11. Complete the following template to assess the company's weighted average cost of capital (wacc) and adjusted weighted average cost of capital (adj-wacc) with the additional business loan. (5 marks) 12. Calculate the project's Initial Outlay and Terminal Value. (2 marks) Initial Outlay: Terminal Value: 3. Calculate the annual cost of capital of bonds. (2 marks) 4. Calculate the annual cost of capital of the preferred stocks. (2 marks) 5. Calculate the annual cost of capital of the common stocks based on Constant Dividend Growth Model (CDGM). (2 marks) 6. Calculate the annual cost of capital of the business loan. (2 marks) 7. Calculate the annual cost of capital for the mortgage. (2 marks) Prepare MACRS 5-year convention for the machineries and determine the after-tax gain or loss on disposal cash flow/ tax savings. (5 marks) Construct a 6-year Pro-Forma Income Statement for the new project and determine the projected operating cash flows. (10 marks) Pro-forma Income Statement 13. Complete the following template to assess the project based on Capital Budgeting Methods. Assess the viability of the new project. (5 marks) 14. The Discounted Payback Period is (2 marks) 15. The NPV of the project is RM (2 marks) 16. The Profitability Index (PI) of the project is (2 marks) Capital Asset Pricing Model (CAPM) The company's beta is 1.9, whereas the cost of risk-free rate instrument is 3.15% and the average market cost of borrowing is 9.14%. The corporate tax is 24%, and the project will be assessed based on Capital Budgeting Techniques. The cost of capital of the project is based on the wacc of the proposed capital structure. Table 1: Interest Expenses [ The financing of the project will be through a 10-year business loan of RM10 million at a rate of 7.83% p.a. The loan will be an additional capital to the company's existing capital structure: 19. Based on Capital Asset Pricing Model (CAPM), calculate the expected required rate of return on the company. (2 marks) 20. Explain the criteria for the project to be accepted based on the return. (3 marks) This question paper consists of ONE (1) Section. Answer ALL questions in the question paper. [60 MARKS] CCC Berhad is assessing a new project which costs RM4.85 million, with additional equipment expenditure of RM0.8 million. The equipment will be depreciated based on MACRS, 5-year convention and to be sold at the termination of the project for 25% of the equipment cost. The 6-year project's sales revenue is RM5.6 million in the first year and increases by 4%, year on year. The fixed cost of the project is RM600,000 annually, and the manufacturing and operation cost will be 30% of the sales revenues. The company's interest expenses for the projects are estimated as follows, not including additional interest expense on the proposed financing
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started