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Solve the weighted average cost of capital

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Reference no: EM132593401

The Monarchy Berhad Company recently hired you as a consultant to estimate the company's WACC. You have obtained the following information.

  • The firm's noncallable bonds mature in 20 years, have an 8.00 percent annual coupon, a par value of RM1,000, and a market price of RM1,050.00. The company's tax rate is 24 percent.
  • The rate for T-Bill is 4.50 percent, the Market Risk Premium is 5.50 percent, and the stock's beta is 1.20.
  • The target capital structure consists of 35 percent debt and the balance is common equity and it does not expect to issue any new common stock.

Question 1: CALCULATE

a. The Yield to Maturity for the bond.

b. The cost of common equity

c. The Weighted Average Cost of Capital for The Monarchy Company.

Reference no: EM132593401

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