1) BINB Brokerage Bhd has come out with a latest package of securities issuance. This package includes the issuance of a 90 days' commercial paper on discount basis at an interest rate of 8% per annum. While brokerage's floating fee is RM2,000 per paper at RM 50,000 par value. Calculate the annualized effective interest rate for a fund amounted RM 2 million based on that commercial paper's package.

 

2) Naima Berhad wants to raise capital through issuance of preferred stock, which pays 7% fixed dividend hence the preferred stock could be issued at discount of RM30 below its par value with floatation cost of RM3 per unit. What is the cost for issuing the preferred stock?

3) What is the cost of issuing common shares if a firm wants to add additional fund by issuing common shares which is currently selling for RM40 per unit and the firms expects to pay RM5 dividend per share next year at the growth rate of 7%? The firm needs to pay RM4 per share for the issuance.

Answer rating: 100% (QA)

1To calculate the annualized effective interest rate for a fund of RM 2 million invested in the commercial paper package offered by BINB Brokerage Bhd ... View the full answer