Reference no: EM132565436

Question 1. PT Sinar Sukses plans to issue several preferred shares with a nominal value of $ 100.00 and dividends of 11%. The shares are sold on the market at a price of $ 97.00 and the company must pay a flotation fee of 5% of the market price. What is the company's preferred cost?

Question 2. PT Sukses Jaya, can issue perpetual preferred shares at a price of $ 50.00 per share. This issuance is expected to pay a constant annual dividend of $ 3.80 per share. The flotation fee for this issue is estimated at 5%. What is the cost of the company's preferred stock (KPS)?

Question 3. PT Sinar Mas estimates that profit, dividend and share growth will reach 9% per year in the future. The company's Common Stock is sold at Rp. 2,500 per share. The final dividend is Rp. 150, - and the company will pay a dividend of Rp. 175, at the end of the current year.

a. Using discounted cash flow (DCF), what is the cost of retained earnings?

b. If it is known that the company's Beta is 1.9 and the risk-free interest rate is 11%, while the average rate of return on the market is 15%. What is the cost of the company's equity using the CAPM approach?

C. If the company's bonds produce a return of 15%. What is the cost of equity using the bond yield approach plus risk premium? If known that the risk premium for bonds is 4%