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Calculate the annual cost of debt

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Reference no: EM133116138

Pic Berhad wishes to issue sukuk worth RM1 million and the maturity value is RM1,000. The sukuk is expected to pay a semi-annual coupon of 5% per year for the next 15 years. The investment banker estimated that it can be sold for RM930 each, and the floatation cost is 2.5%.

The sukuk can be called at year 10 and the maturity value will be RM1,200 each.

Tax rate is 24%.

a) Calculate the annual cost of debt. _________%

b) The after tax cost of debt is _______%

c) If the issuance is a callable sukuk, what is the annual cost of debt? _________%

d)The after tax cost of debt is _________%

The company has the following financing:

Motor vehicles: RM125,000 -- rate 2.85% p.a.

Property: RM1.2 million -- rate 3.01% p.a.

Business Financing: RM800,000 -- rate 7.3%

The tax rate is 24%.

a) Total debt financing is RM_________.

b) Weight for Property financing is ______%

c) Weighted cost of debt on financing is _______%

d) After tax cost of debt on financing is ________%

Reference no: EM133116138

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