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Question 1 Sayjana Berhad has 10 million shares of common stock outstanding, which currently trade at a price of RM5.00 per share. The company just
Question 1 Sayjana Berhad has 10 million shares of common stock outstanding, which currently trade at a price of RM5.00 per share. The company just declared and paid a certain amount of dividend per share At the same time, it is expected that the dividend will grow at a certain rate. The company also has RM47.1 million (par value) in 5-year fixed rate notes (bonds) with a coupon rate of 8% and a yield to maturity of 7% (before tax). Because the yield to maturity on these bonds is lower than coupon rate, they trade at a premium. The current market value of the 5-year bonds is RM49 million. Lastly, the company has 2,000,000 outstanding preferred shares, which pay an RM0.80 annual dividend and currently trade for RM8.00 per share. Common Dividend Tax Pay-out Target Dividend Growth rate ratio (%) portion of Per share rate (%) (%) equity (RM) capital (%) 0.25 5 24 30 45 Determine the proportion of each source of capital (based on the capital used). a. (1 mark) b. Determine the cost of debt after tax (1 mark) Compute the cost of preferred stock.. e. (1 mark) d. Compute the weighted average cost of capital
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