Question 1 (August 2017) a) Yennox Bhd. wishes to calculate its weighted average cost of capital (WACC) based on the following information 50 million RM30 milion RM20 million RM15 lion RM2.00 per share RM105 per RM100 bond Number of ordinary shares Book value of 5% convertible bond Book value of 9% long-term loan Market value of overdraft Market price of ordinary shares Market value of convertible bond Yennox expects the share price to rise in the future at a rate of 5% per annum. The convertible bonds can be redeemed in 5 years' time at a 1 value or converted in 6 years' time into 40 shares of Yennox per RM100 bond. The cost of debt is 8%. 0% premium to their nominal Yennox has geared equity beta of 1.4. The risk-free rate is 4% and the market return is 10%. The annual corporate tax rate is 30%. Analyse the weighted average cost of capital (WACC) of Yennox. State clearly the assumptions you make (13 marks)