Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help me / Please help me .. Please i will upvote you . Question 3 TSL Bhd (TSL) is a property developer listed in

Please help me / Please help me .. Please i will upvote you .

image text in transcribed

Question 3 TSL Bhd (TSL) is a property developer listed in the Main board of Bursa Malaysia. TSL has 500 million ordinary shares on issue. The market price of its shares is RM0.65. The nominal value of its shares is RM0.50. TSL declared that it will pay dividends of RM25 million this year. Dividends are expected to grow at 4% per annum. TSL is also financed by RM500 million redeemable 3.8% bonds. These bonds will be redeemable in 4 years' time at par value. The current market price is RM98.70 per RM100 nominal value bond. Tax is 30% Required: a. Calculate the company's cost of equity. b. Calculate the company's cost of redeemable bond. C. Calculate the company's weighted average cost of capital (WACC). d, Explain why TSL should use WACC as the benchmark when assessing whether a project should be undertaken or not instead of the current criteria of approving only projects that offer an accounting rate of return of above 15%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Financial Management

Authors: Geert Bekaert, Robert J. Hodrick

1st Edition

0131163604, 9780131163607

More Books

Students also viewed these Finance questions