Financial management
CAPITAL VALUATION AND COST OF CAPITAL
Eco Berhad financing comprises of the followings:
1. Hire Purchase: Total valuation of RM400,000, at an interest of 3.12% p.a. for 9 years.
2. Mortgage: Property value of RM2 million for 25 years, and monthly instalment of RM11,311.00.
3. Business Loan: RM1.5 million at 8.55% p.a. for 10 years.
4. Outstanding bonds: Issued price was RM875 per unit, for 20 years and the coupon rate is 5% to be paid semi-annually. Total valuation RM2.625 million.
5. Common stock: The last paid dividend was RM0.013 per unit and dividend growth is constant at 6%. The stock is priced at RM1.87 per unit. Outstanding share is RM4 million.
6. Preferred stock: The dividend is determined to be 7% on par value of RM100, and it was sold for RM95 per unit. Total valuation is RM1.9 million.
The company plans to issue 2,000 units of 15-year new bonds, with the maturity value is RM1,250 per unit. The coupon rate is 7% annually, and the current yield to maturity is 8.5%.
ThThe monthly instalment on the hire purchase is RM_____________.
e tThe annual interest rate on the mortgage is ______%.
axThe cost of capital of the common stock is _______%.
ratThe monthly instalment of the business loan s RM____________.
e iThe cost of capital of the bond is _____%.
s The cost of capital of the preferred stock is _______%.
24%Calculate the price of the new bond. RM___________.
.Calculate the net proceed of the new bond. RM___________.
The cost of capital of the new bond is _________%.
The current total value of the company's capital structure is RM_______________.
Total valuation of new bond issuance is RM______________.
The weightage of the common stock in the capital structure is _________%.
The weightage of the total debt in the capital structure is _________%.
The weightage of the preferred stock in the capital structure is _________%.
The current wacc of the company is _________%.
The current adjusted wacc of the company is __________%.
The expected wacc with the issuance of the new bond will be _________%.
The expected adjusted wacc with the issuance of the new bond will be _________%.
Given the beta of the company is 1.8 and risk free rate cost is 3.85%. The current cost of market is 7.89%. Determine the company's cost of capital based on CAPM.
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