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The following are the financial information of Seri Cendana Berhad, a publicly traded company in Bursa Malaysia. The company is looking at setting up
The following are the financial information of Seri Cendana Berhad, a publicly traded company in Bursa Malaysia. The company is looking at setting up a manufacturing plant overseas to produce a new line of the production. As the financial manager, you are required to prepare a financial evaluation of a proposed expansion of the company's production. Common Stock Preferred Stock Debt Market Required: a) b) 7,000,000 shares outstanding, selling for RM70 per share 400,000 shares, outstanding, selling for RM80 per share. Dividend paid is RM5 per share. RM240,000, 7.5 percent coupon bonds outstanding, 20 years to maturity, selling for 94 percent of par; the bonds have a RM1,000 par value each and make semiannual payments. 8 percent expected market risk premium; 5 percent risk-free rate; The company's tax rate is 35 percent and the beta is 1.2 Calculate Seri Cendana's capital structure weights and the company's total value on a market values basis. (8 marks) Compute the company's Weighted Average Cost of Capital (WACC). (12 marks)
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