Stellar Corporation is currently a 100 percent equity capital firm with a cost of equity of 10 percent. Its operating profit is expected to maintain RM1,400,000 annually perpetually. The company is planning to invest in a new project that cost RM5,000,000 and for this reason, the company decides to finance 50 percent of this cost of project through debts with annual interest rate of 6 percent. Currently the company has 20 percent tax rate bracket. Calculate:

(a) Value of the firm without debt.

(3 marks)

(b) Value of the firm with debt.

(3 marks)

(c) Value of equity after market capitalization

(2 marks)

(d) Cost of equity after market capitalization

(3 marks)

(e) Weighted Average Cost of Capital after market capitalization

(4 marks)

(f) Weighted Average Cost of Capital after market capitalization if no tax involved

(10 marks)