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Following is the Statement of Financial Position of Kembang Pagi Berhad (KPB) as at 30th June 2022: Principles of Finance (BAFB1013) September 2022 Final Examination
Following is the Statement of Financial Position of Kembang Pagi Berhad (KPB) as at 30th June 2022: Principles of Finance (BAFB1013) September 2022 Final Examination CONFIDENTIAL Additional note: KPB's before tax cost of debt is 9.5\%. KPB's common stock sells for RM60.00, and dividends paid last year were RM5.00. Flotation costs on issuing new common stock is 3.2% of the selling price. The dividends are predicted to have a 10% growth rate. Corporate tax is 20%. From the above information, you are required to answer the following questions. a. Compute: i. after -tax cost of debt (5 Marks) ii. cost of common equity (5 Marks) iii. cost of new common equity (5 Marks) b. Based on your computation in part (a), calculate KPB's Weighted Average Cost of Capital (WACC). (5 Marks) c. KPB is considering a project that will give a return of 18%. Should KPB proceed with this project? Explain your
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