QUESTION 5 (15 MARKS) As a consultant to Maju Corporation, vou have been asked to compute the appropriate discount rate to use in the evaluation of the purchase of a new warehouse facility. You have determined the market value of the firm's current capital structure (which the firm considers to be its target mix of financing sources) as follows: Source of Capital Bonds Preferred stock Common Stock Market Value RM500,000 RM100,000 RM400,000 To finance the purchase, Maju will sell 20-year bonds with a RM1,000 par value paying 6% per year (with interest paid semiannually) at the market price of RM1,020. Preferred stock paying a RM2.50 dividend can be sold for RM35. Common stock for Maju is currently selling for RM50 per share. The firm paid a RM4 dividend last year and expects dividends to continue growing at a rate of 4 % per year for the indefinite future. The firm's marginal tax rate is 34 % . What firm's weighted average cost of capital (WAC should you use to evaluate the warehouse project? (Hint: cost of debt can use the formu of YTM) (15 mar (CLO2:PLO5: END OF QUESTIONS * * QUESTION 5 (15 MARKS) As a consultant to Maju Corporation, vou have been asked to compute the appropriate discount rate to use in the evaluation of the purchase of a new warehouse facility. You have determined the market value of the firm's current capital structure (which the firm considers to be its target mix of financing sources) as follows: Source of Capital Bonds Preferred stock Common Stock Market Value RM500,000 RM100,000 RM400,000 To finance the purchase, Maju will sell 20-year bonds with a RM1,000 par value paying 6% per year (with interest paid semiannually) at the market price of RM1,020. Preferred stock paying a RM2.50 dividend can be sold for RM35. Common stock for Maju is currently selling for RM50 per share. The firm paid a RM4 dividend last year and expects dividends to continue growing at a rate of 4 % per year for the indefinite future. The firm's marginal tax rate is 34 % . What firm's weighted average cost of capital (WAC should you use to evaluate the warehouse project? (Hint: cost of debt can use the formu of YTM) (15 mar (CLO2:PLO5: END OF QUESTIONS * *