QUESTION 4:

1. Determine the Weighted Average Cost of Capital (WACC) for Grande Venti Sdn Bhd which has:

• RM110 million in equity
• RM25 million outstanding debt
• A required return of 9%
• RM10 million in outstanding equity shared which are trading at RM14 each with a required return of 11%
• A tax rate of 35%
• Equity + debt is RM145 million

(9)

b) YNWA Sdn Bhd has RM90 million in marketable securities, RM190 million in debt, RM45 million in preferred shares, and RM220 million in equity (book value). In addition, the following information is given:

• Free Cash Flow at time 0 (FCF0) = RM11 million
• WACC of 12%
• Growth rate of 6%

What is the Value of Production (VOP) at time 0? Show clear computations.

(6)

(Total: 15 Marks)