Determine the weighted average cost of capital

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Question - Gegar Bunyi Corporation is investing in a major capital budgeting project that will require the expenditure of RM16 million. The money will be raised by issuing RM2 million of bonds, RM4 million of preferred shares and RM10 millions of new ordinary shares. The company estimates that after-tax cost of debt will be 7%, cost of preferred shares 9%, and the cost of new issues of ordinary shares 17%. Determine the weighted average cost of capital (WACC) for this project.

Reference no: EM133174466

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