Currently, TCB's total assets is RM70 million in which 65% is financed by equity. TCB had...

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Currently, TCB's total assets is RM70 million in which 65% is financed by equity. TCB had never issued preferred shares. TCB's cost of equity is 13% while before tax cost of debt is 8%. TCB is considering to raise the required capital expenditure of this project through a mix equity and debt financing and would like to maintain the current capital structure. The current cost of equity and before tax cost of debt are expected to remain following the additional fund raise to finance this new project. TCB's corporate tax is 28%. a) Should TCB make a decision to accept or reject this proposed project of this new product based on NPV, IRR and MIRR evaluation methods? Show your calculation. b) Show an illustration of the sensitivity analysis and scenario analysis respectively for this project. (You may use your own assumptions on the probability) Currently, TCB's total assets is RM70 million in which 65% is financed by equity. TCB had never issued preferred shares. TCB's cost of equity is 13% while before tax cost of debt is 8%. TCB is considering to raise the required capital expenditure of this project through a mix equity and debt financing and would like to maintain the current capital structure. The current cost of equity and before tax cost of debt are expected to remain following the additional fund raise to finance this new project. TCB's corporate tax is 28%. a) Should TCB make a decision to accept or reject this proposed project of this new product based on NPV, IRR and MIRR evaluation methods? Show your calculation. b) Show an illustration of the sensitivity analysis and scenario analysis respectively for this project. (You may use your own assumptions on the probability)

Answer rating: 100% (QA)

Here are the workings for evaluating the project based on NPV IRR and MIRR Assumptions Initial investment for the project RMX amount not provided Cash ... View the full answer