The Winning Company will need to determine the appropriate discount rate for the purchase of a new processing plant for your company. The market value of the source of capital for the purchase of this new processing plant is as follows: Source of capital Market value (RM) Bon 22,400,000 Shares mainly 9,100,000 Ordinary shares 38,500,000 To finance the purchase of this plant, Syarikat Menang will issue a 10-year bond that pays interest of 6% per annum at a market price of RM1020. The floatation cost of this bond is 4% of the market price. Syarikat Menang will also issue shares, especially those that pay a dividend of RM2.50 and are sold at a price of RM16.50. The cost of issuing principal shares is 3.75% per share. In addition, the ordinary shares of Syarikat Menang are being sold at RM40 per share. The company paid a dividend of RM2.00 last year and this dividend will grow at a rate of 10% per annum. The floating cost for ordinary shares is RM2.50 per share and the tax rate is 30%. The Company does not intend to issue new ordinary shares. Based on the following information, calculate:

a. Debt cost (bonds)

b. Stock costs especially

c. Common stock cost

d. Weighted average cost of capital (WACC)

Answer rating: 100% (QA)

a Cost of debt is the IY rate function of below variables 1Y N20 years ... View the full answer