Question: PLEASE ANSWER FULLY FROM A TO B, C AND D, ANSWER NOW THANKS Lope Corporation is planning to buy a bond that matures in 15

PLEASE ANSWER FULLY FROM A TO B, C AND D, ANSWER NOW THANKSPLEASE ANSWER FULLY FROM A TO B, C AND D, ANSWER NOW

Lope Corporation is planning to buy a bond that matures in 15 years. The annual coupon payment is at the rate of 4.5%, and has a par value of RM1,000. Assume that the expected rate of return is 3%, and calculate the bond value. (2 Marks) Based on your answer in part (a), what is the effect on the value of the bond when the coupon payment is less than the expected rate of return? (2 Marks) Combo Corporation is planning to expand its business, and it needs to raise up its capital to RM40 million. It plans to issue 30 million shares with a market value of RM1.00 per share, and the remaining of 10 million will be debt financing through bonds. The par value and market value of each bond are RM1,000. The equity beta of the firm is 1.3 . The yield on risk-free investment is 3% per year and the equity risk premium is approximately at 7% per year. The firm pays taxation at an annual rate of 30%. From the above information, you are required to calculate: i. The after-tax cost of debt. (2 Marks) ii. The cost of the firm's equity. (3 Marks) iii. The weighted average cost of capital based on your answers in parts (i) and (ii). (5 Marks) Joker Corporation is planning to issue shares at the price of RM5, and the flotation cost will be RM1.50. The company's dividend paid out last year was RM1.10 for each share. It is expected to grow at 3%. What is the cost of capital for Joker Corporation? (6 Marks) (Total: 20 Marks)

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