QUESTION 3

YJY Bhd is evaluating the optimal capital structure based on the information below:

Source of Capital	Percentage of Financing
Debt	38%
Ordinary shares	42%
Preference shares	20%

Additional information:

1. Debt: cost of debt (before tax) 8%

2. Ordinary share: expected dividend RM0.50 share price RM4.10 floatation cost RM0.20

3. Preference share: dividend RM0.13 share price RM1.20 floatation cost RM0.11

4. Growth rate 5%

5. Corporate tax rate 28%

Required:

Calculate the weighted average cost of capital (WACC) for YJY Bhd.