help meeee question 3

af Open with (TOTAL: 25 MARKS) Question 3 a) Explain the advantages of raising funds through combination of various sources of financing instead of using just one source of financing. (5 marks) Continued... zs 217 BEN1024 PRINCIPLES OF FINANCE SIUNE RORO b) Jaya Berhad is determining the optimal capital structure based on the information below: Capital Resources Percentage of Financing (%) Long term debt 35 Preference Shares 10 Ordinary Shares 55 Long term debt: The company can issue bonds that have a maturity period of 20 years with a face value of RM1,000. The coupon rate for the bonds is 10% and is sold at the price of RM980. The company estimates that it can issue debt at the rate of Ins and its tax rate is 40%. 3 / 8 a + Page Preference. Shares MacBook Air zaigeoad 3ey WMCRV 25leGAacLVO8OYC/view df Open with 10 b) Jaya Berhad is determining the optimal capital structure based on the information below: Capital Resources Percentage of Financing (%) Long term debt 35 Preference Shares Ordinary Shares 55 Long term debt: The company can issue bonds that have a maturity period of 20 years with a face value of RM1,000. The coupon rate for the bonds is 10% and is sold at the price of RM980. The company estimates that it can issue debt at the rate of 10.41%, and its tax rate is 40%. Preference Shares: The company found that it can issue preference shares at the prices of RM6.50 per share with annual dividend payment of RM0.80. The cost involved in issuing and selling shares is RM0.30 per share. Ordinary Shares: The ordinary shares of the company are sold at the present price of RM5 per share. The dividend that is expected to be paid at the end of next year is RM0.80. The growth rate of dividends is constant, that is at 6% every year. The company must pay the floatation cost of RM0.20 per share Based on the above information, calculate: i after tax cost of debt; (5 marks) 11. cost of preference share (5 marks) 111 (5 marks) cost of ordinary share, and IV weighted average cost of capital (WACC). (5 marks) (TOTAL: 25 MARKS) Page 4 / 8 a +