Question: b) The capital structure for the Salam Bhd measured using the market values of each firm's sources of capital is provided below: (4 marks) Capital
b) The capital structure for the Salam Bhd measured using the market values of each firm's sources of capital is provided below: (4 marks) Capital Structure In Market Values ('000) The company plans to maintain its debt structure in the future. If the firm has a 5.6% after tax cost of debt, a 12.4% cost of preferred stock, and 17% cost of common equity, what is the firm's weighted average cost of capital (WACC)? c) A review of current market conditions at the end of April 2014 reveals that the 10-year US Treasury Bond (or risk-free rate) is 2.6%, the estimated market risk premium is 5.7% and the beta for Pureen's common stock is 1.15 Determine cost of common equity of Pureen using CAPM. (4 marks) d) If Eric Company is issuing preferred stock at RM100 per share, with a stated dividend of RM14 and a floatation cost of 4.2%, what is the cost of preferred stock? (4 marks) e) Calculate for Ali's common stock if the risk free rate is currently at 4% and the market return is 15% and Cost of Equity =21.6% (4 marks)
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