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Please explain and answer with the formula and calculation 1. Danang Corporation currently has an all equity capital structure. Danang Corporation has an expected earnings
Please explain and answer with the formula and calculation
1. Danang Corporation currently has an all equity capital structure. Danang Corporation has an expected earnings before interest and tax of RM10,000 per year forever and a required return to equity of 16 percent. Danang's pays corporate taxes at a rate of 35 percent. All transaction takes place in a perfect capital market. Required: (a) Calculate the value of Danang Corporation. (3 marks) (b) Determine Danang Corporation's Weightage Average Cost of Capital (WACC) if Danang Corporation leverages the firm by borrowing RM18,000 at an interest rate of 10 percent. (12 marks) 2. The shareholders' equity portion of Selayang Baru Corporation as at 31 December 2017 is as follow: RM 20,000,000 Common Share (RM10 par per share) Capital in excess of par 17,000,000 Retained earnings 33,000,000 The net income of Selayang Baru Corporation for the year ended 31 December 2017 is RM35,500,000 and the current market value of Selayang Baru's share is RM20 per share. Required: (a) Calculate Earnings Per Share (EPS) for Selayang Baru Corporation if the company declared: i. 20 percent share dividend. (4 marks) CORPORATE FINANCEI 2/8 ii. RM1,550,000 cash to repurchase its share. (4 marks) (b) Show the effects to shareholders' equity portion of Selayang Baru Corporation if the company declared: i. RM2.50 share dividend per share. (3 marks) 1-for-4 share split (4 marks) 2/8Step by Step Solution
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