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(b) Pasta Chips Berhad is an unlevered firm with the cost of equity 20 percent per year. Based on the current evaluation made by financial
(b) Pasta Chips Berhad is an unlevered firm with the cost of equity 20 percent per year. Based on the current evaluation made by financial manager, Pasta Chips Berhad expected to have Earnings before Interest and Tax (EBIT) amounted RM600,000 in perpetuity. The bank charged interest rate 10 percent per annum. Calculate the Weightage Average Cost of Capital WACC) for Pasta Chips Berhad if the company decided to change its capital structure by issuing additional debt of RM1,200,000 from Maybank to finance new project. (10 marks)
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