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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
The Assignwell Bhds 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 noncurrent assets at the end of the year by RM million.
The firm's debentures are currently selling at RM The par value of these debentures
is RM each. The debentures have years maturity period. Floatation cost is estimated
to be at of the market price of the debentures and the debentures will be redeemed at
RM
While, for the ordinary shares is currently selling at RM per share. Assignwell Bhd has
just paid dividends of RM per share to its ordinary stockholders. The dividends are
expected to grow at per annum. Flotation cost is estimated to be RM per share.
Assignwell Bhd preference shares, with nominal value of RM is selling at RM
In addition to that, the firm has RM million retained earnings available to finance any
profitable project investment next year. The corporate tax rate is
Required:
a Compute the cost of:
i Aftertax cost of debenture.
marks
ii Internal equity.
marks
iii. External equity.
marks
iv Preference shares.
mark
b Determine the firm's weighted average cost of capital of the firm.
marks
Total: marks
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