What is musli weighted average cost of capital

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Reference no: EM133014516

Question - Musli Holdings Bhd is an investment holding company which is engaged in the provision of management services. The primary business was the manufacturing and sales of enameled copper wires and copper rods. It is carried out in Malaysia, Hong Kong and the People's Republic of China. The company's subsidiaries are engaged in investment holding, manufacturing and exporting enameled copper wires and copper rods to various markets, licensed manufacturing warehouses and trading of enameled copper wire. Majority of its revenue is derived from Malaysia. Musli Holdings Bhd has free cash flow (FCF) of RM700 million. Musli's before-tax cost of debt is 5.7 percent, and its required rate of return for equity is 11.8 percent. The company expects a target capital structure consisting of 20 percent debt financing and 80 percent equity financing. The tax rate is 33.33 percent, and FCF is expected to grow forever at 5.0 percent. Musli has debt outstanding with a market value of RM2.2 billion and has 200 million outstanding common shares.

Required -

1. What is Musli's weighted average cost of capital?

2. What is the value of Musli's equity using the FCF valuation approach?

3. What is the value per share using this FCFF approach?

Reference no: EM133014516

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