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Determining the firm cost of long term financing

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Reference no: EM133020075

Question - Zura Consultant Bhd is seeking for financial advice in determining the firm's cost of long term financing. The following are the relevant data which used in that company.

-The cost of debt before tax is 10 percent annually. The firm's tax is 50 percent.

-The dividend of preferred share is 15 percent of market value. The value of the market is RM150 while flotation cost is 10 percent from RM100 par value.

-A common share is currently selling at RM50 per share. The last dividend paid was RM4.50 and it expected to grow at constant rate of 5 percent.

Reference no: EM133020075

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