ONLINE GROUP PROJECT (4-5 STUDENTS IN A GROUP) TOPIC : CAPITAL STRUCTURE UPLOAD QUESTION: WEEK 11 (24/6/22) SUBMISSION : WEEK 12 (1/7/22) QUESTION Karisma Global Berhad has been a public listed company with Bursa Malaysia since 2012. The principal activity of the company is manufacturing fabricated aluminum valve which is mainly exported to Europe. The company has a debt to total assets ratio of 20%. The annual interest payments on its outstanding debts amounted to RM 2.1 million. The cost of this debt is 7 percent per annum. Karima Global Berhad expects its earnings before interest and taxes (EBIT) to be RM24 million every year indefinitely. The company proposes to announce the issue of an additional RM30 million of corporate debt which will be used to repurchase the company's stocks. Required: a) b) d) Determine the current value of Karisma Global Berhad. Calculate the company's existing cost of equity. ii. Assuming after the announcement is made, the company has to pay a 25 percent corporate tax, calculate: i. Value of the firm iii. (2 marks) Required return on equity. Weighted average cost of capital (4 marks) (9 marks) Relates with the firm's value and the required return on equity, discuss the reaction of the firm's stock price at Bursa Malaysia after the announcement made. (5 marke)