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please teach me this formula according to malaysiMalaysian finance education system standsard QUESTION 3 The Assignwell Bhd . ' s present capital structure has been

please teach me this formula according to malaysiMalaysian finance education system standsard
QUESTION 3
The Assignwell Bhd.'s present capital structure has been determined as follows:
The CEO of Assignwell Bhd. has asked you to measure the cost of various sources of
financing for the purpose of future investments decisions and the firm now is considering to
increase its non-current assets at the end of the year by RM9.8 million.
The firm's 9% debentures are currently selling at RM1,050. The par value of these debentures
is RM1,000 each. The debentures have 13 years maturity period. Floatation cost is estimated
to be at 5.5% of the market price of the debentures and the debentures will be redeemed at
RM1,200.
While, for the ordinary shares is currently selling at RM35.20 per share. Assignwell Bhd. has
just paid dividends of RM6.80 per share to its ordinary stockholders. The dividends are
expected to grow at 3% per annum. Flotation cost is estimated to be RM7.30 per share.
Assignwell Bhd.7% preference shares, with nominal value of RM1,100, is selling at RM1,350.
In addition to that, the firm has RM5.6 million retained earnings available to finance any
profitable project investment next year. The corporate tax rate is 27%.
Required:
a. Compute the cost of:
i. After-tax cost of debenture.
(10 marks)
ii. Internal equity.
(3 marks)
iii. External equity.
(3 marks)
iv. Preference shares.
(1 mark)
b. Determine the firm's weighted average cost of capital of the firm.
(3 marks)
(Total: 20 marks)
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