1. Orient Corporation issued 15 year, 10 percent preference shares five years ago. The preference share which has a face value of RM 100 is currently selling for RM 105. Using the approximate yield formula, calculate the cost of preference shares.

(10 marks)

b. Nithi Corporation has a target capital structure of 70 percent equity and 30 percent debt. Its cost of equity is 15 percent and its pre-tax cost of debt is 12 percent. If the relevant tax rate is 32 percent, what is Nithi Corporation's WACC?

(15 marks)