Question: Please help please i will give good rating A corporate bond has been issued on January 1, 2005, that will mature on January 1 ,
Please help please i will give good rating

A corporate bond has been issued on January 1, 2005, that will mature on January 1 , 2025. The annual coupon payment rate is 5% and has a par value of RM 1,000 . If Pluto Berhad plans to buy the bond on January 1,2017 , what is the value of the bond with an expected rate of return of 3% ? Kejora Berhad is planning to expand its business, and it needs to raise up its capital to RM40 million. It plans to issue 20 million shares with a market value of RM0.50 per share, and the remaining of RM30 million will be debt financing through bonds. The par value and market value of each bond are RM1,000. The bonds pay annual interest before tax of 5%. The yield on risk-free investment is 2% per year and the equity market risk is approximately at 10% per year. The equity beta of the firm is 1.2 . 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. ii. the cost of firm's equity. iii. the weighted average cost of capital based on your answers in part (i) and (ii)
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
