Compute the cost of capital for mirza capital structure

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Reference no: EM133239459

The following Capital structure is extracted from Mirza Corporation Sdn Bhd a multinational company producing electronic gadgets. The capital structure on Jun 2022 is as followed. The number of common stock outstanding was 40,000 units and value is RM$8,000,000. The preference share valued at RM$2,000,000 and expected dividend payout is 11%. The preferred stock par value is RM$1.00 and current internal trading price is RM1.08. We have taken debenture as loan which amount to RM$6,000,000 and pay 12% as interest rate. The par value of debenture is RM$100 and Market price is RM$90. The share of the company currently is traded for RM$25. The company is expected to pay a divided of RM$2 per common share which will grow at 7% forever. The tax bracket for the company is 40%.

1. Compute the Capital structure and the proportion

2. Compute the cost of the capital for Mirza's Capital structure.

3. Compute the weighted average cost of capital for the existing capital structure.

Reference no: EM133239459

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