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(iv)Daye Bhd is trying to estimate its cost of common equity, and it has the following information. The firm has a beta of 0.90, the
(iv)Daye Bhd is trying to estimate its cost of common equity, and it has the following information. The firm has a beta of 0.90, the before-tax cost of the firm's debt is 7.75%, and the firm estimates that the risk-free rate is 4% while the current market return is 12%. Compute the cost of common equity. (2 marks) (v) AGA Bhd is trying to determine the appropriate cost of preferred stock to use in determining the firm's cost of capital. This firm's preferred stock is currently selling for RM29.89 and pays a perpetual annual dividend of RM2.60 per share. Compute the cost of preferred stock for XYZ. (2 marks) (6) Eikir_Bhd is considering to purchase a printing machine. The relevant information is given below: Cost of the printing machine: RM150,000 Annual cash inflows: RM45,000 Useful life of printing machine: 15 years Annual cash expenses: RM5,000 Company requires a 14% after-tax return on all investments . Required: Compute the net present value (NPV) of the printing machine and decide whether to purchase the printing machine (4 marks)
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