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perties Berhad uses the following four sources of capital in their company's operations; No Sources of Capital Amount Cost model 1 Ordinary stock RM300 Million 10.0% 2 Priority share RM200 Million 14.0% 3 Bond RM400 Million 7.0% (before tax) 4 Retained earnings RM100 Million 8.0%

perties Berhad uses the following four sources of capital in their company's operations; No Sources of Capital Amount Cost model 1 Ordinary stock RM300 Million 10.0% 2 Priority share RM200 Million 14.0% 3 Bond RM400 Million 7.0% (before tax) 4 Retained earnings RM100 Million 8.0%

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Prime Properties Berhad uses the following four sources of capital in their company's operations;

No

Sources of Capital

Amount

Cost model

1

Ordinary stock

RM300 Million

10.0%

2

Priority share

RM200 Million

14.0%

3

Bond

RM400 Million

7.0% (before tax)

4

Retained earnings

RM100 Million

8.0%

 

 

 

 


If a corporate tax rate of 28 per cent per annum is imposed on this company, what is the weighted average cost of capital (WACC) for the company?

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