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Gordon Jr. was appointed as the new CFA of Zick Zack Pte Ltd, last month. Zick Zack Pte Ltd involved in a third party ware house service provider. As a business diversification plan, Zick Zack Pte Ltd planning to penetrate into shipping services within Malay archipelago. At least three of their directors have experience in small and medium type shipping business. Gordon Jr’s primary task is to improve organizational performance through
In order to support shipping business, Zick Zack Pte Ltd will purchase two units of medium sized ships. The company will sell 10 year bond paying 7% per year. The preferred shares is paying a dividend of RM1.5 and the preferred shares can be sold at a market price of RM12 and the cost of issuing the
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Calculate the cost of debt (bond)
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Calculate the cost of preferred share
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Calculate the cost of new common share
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Calculate the Weighted Average Cost of Capital (WACC) for Zick Zack Pte Ltd.
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Explain the disadvantages of Weighted Average Cost of Capital (WACC) as a techniques for evaluating new projects for Zick Zack Pte Ltd.
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