Question 12 Saujana 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. Dividend Common Dividend Tax rate Pay-out ratio (%) Growth rate (%) Target portion of equity capital (%) Per share (%) (RM) 0.25 5 24 30 45 a. Determine the proportion of each source of capital (based on the capital used). (1 mark) b. Determine the cost of debt after tax (1 mark) c. Compute the cost of preferred stock. (1 mark) d. Compute the weighted average cost of capital. (3 marks) Question 13 Unplugged Coffee Berhad is the best known purveyor of coffee in town. Its stock traded in the range of RM5.00 - RM6.00 per share during first quarter of 2021. At the end of its 2020 fiscal year (31 December 2020). Unplugged had debt with a market value of about RM200 million, had not issued preferred stock, and had 3,9879 million of shares of common stock outstanding. It fiscal year-2021 free cash flow was about RM233 million. It revenues and operating profits grew at compound annual rates of about 27% and 38% respectively, between fiscal years 2018 - 2020. Indeed, many customers were buying Unplugged coffee during that period. The coffee market is growing and, at the same time, competition is getting stiffer. Analyst predicted that Unplugged Coffee would experience about 25% growth in free cash flow (FCF) from the end of 2020 through 2024, followed by 10% annual growth thereafter as a result of competition and maturation of the market. Discount Rate% 12 a. Determine the market value of the firm if weighted average cost of capital depends on the discount rate. (3 marks) b. Determine the value of equity. (2 marks) C. What is the price of company stock per share? Is the value of the company's stock comparable to the price currently traded in Bursa Malaysia? Justify. (3 marks) d. What is the other approach that can be used for valuation of common stock? Present the equation for this purpose. What are the advantages of using firm valuation model. (2 marks) All steps involved in the calculations must be shown