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Please help me . Please please Company SBS9 is evaluating the following list of Investments. The target capital structure is to use 50% Debt and
Please help me . Please please
Company SBS9 is evaluating the following list of Investments. The target capital structure is to use 50% Debt and 50% Equity. Net Income last year was RM40 and the company intends to pay dividends to the amount of RM10. The interest rate that banks will charge for any amount of loans is 8%. The Corporate Tax Rate is 30%. Fixed deposits rates in the market is currently 3%. This rate is considered risk free (RF). The stock market is forecasted to provide a return of 15% which will be used as the required return from the market. The unlevered beta for the company is 0.8. Any new shares issue will be charge a 3% flotation cost. Required: a. What is the amount of the first stage financing using the intended capital structure and that the company needs to pay the dividends payment. b. Calculate the leverage beta at the first stage of financing? c. Calculate the cost of equity at the first stage of financing? d. Calculate the cost of equity after the first stage of financing? e. Calculate the Weighted Average Cost of Capital at the first financing stage and the second financing stage? f. Explain whether each of the project can be chosen. Explanation must include the cost of capital of the projectStep by Step Solution
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