CAPITAL VALUATION AND COST OF CAPITAL

Eco Berhad financing comprises of the followings:

$1.$ Hire Purchase: Total valuation of RM$400,000,$ at an interest of $3\mathrm{.}12\%$ p$.$a$.$ for $9$ years.

$2.$ Mortgage: Property value of RM$2$ million for $25$ years, and monthly instalment of RM$11,311\mathrm{.}00.$

$3.$ Business Loan: RM$1\mathrm{.}5$ million at $8\mathrm{.}55\%$ p$.$a$.$ for $10$ years.

$4.$ Outstanding bonds: Issued price was RM$875$ per unit, for $20$ years and the coupon rate is $5\%$ to be paid semi$-$annually. Total valuation RM$2\mathrm{.}625$ million.

$5.$ Common stock: The last paid dividend was RM$0\mathrm{.}013$ per unit and dividend growth is constant at $6\%.$ The stock is priced at RM$1\mathrm{.}87$ per unit. Outstanding share is RM$4$ million.

$6.$ Preferred stock: The dividend is determined to be $7\%$ on par value of RM$100,$ and it was sold for RM$95$ per unit. Total valuation is RM$1\mathrm{.}9$ million.

The company plans to issue $2,000$ units of $15-$year new bonds, with the maturity value is RM$1,250$ per unit. The coupon rate is $7\%$ annually, and the current yield to maturity is $8\mathrm{.}5\%.$

The tax rate is $24\%.$

The monthly instalment on the hire purchase is RM$\_\_\_\_\_\_\_\_\_\_\_\_\_.$

The annual interest rate on the mortgage is $\_\_\_\_\_\_\%.$

The monthly instalment of the business loan s RM$\_\_\_\_\_\_\_\_\_\_\_\_.$

The cost of capital of the bond is $\_\_\_\_\_\%.$

The cost of capital of the common stock is $\_\_\_\_\_\_\_\%.$

The cost of capital of the preferred stock is $\_\_\_\_\_\_\_\%.$

Calculate the price of the new bond. RM$\_\_\_\_\_\_\_\_\_\_\_.$

Calculate the net proceed of the new bond. RM$\_\_\_\_\_\_\_\_\_\_\_.$

The cost of capital of the new bond is $\_\_\_\_\_\_\_\_\_\%.$

Total valuation of new bond issuance is RM$\_\_\_\_\_\_\_\_\_\_\_\_\_\_.$

The current total value of the company's capital structure is RM$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.$

The weightage of the total debt in the capital structure is $\_\_\_\_\_\_\_\_\_\%.$

The weightage of the preferred stock in the capital structure is $\_\_\_\_\_\_\_\_\_\%.$

The current wacc of the company is $\_\_\_\_\_\_\_\_\_\%.$

The current adjusted wacc of the company is $\_\_\_\_\_\_\_\_\_\_\%.$

The expected wacc with the issuance of the new bond will be $\_\_\_\_\_\_\_\_\_\%.$

The expected adjusted wacc with the issuance of the new bond will be $\_\_\_\_\_\_\_\_\_\%.$

Given the beta of the company is $1\mathrm{.}8$ and risk free rate cost is $3\mathrm{.}85\%.$ The current cost of market is $7\mathrm{.}89\%.$ Determine the company's cost of capital based on CAPM.

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