Stargate Nation Sdn Bhd operates a very successful manufacturing plant in Batu Kawan Industrial Area. The company needs to raise funds for its planned expansion into the Northern Part of Malaysia. The firm's balance sheet at the close of 2021 appeared as follows:< a. b. Cashe Accounts Receivable Inventories Net Plant and Equipment C. Total Assets RM 2,210,000+ 4,380,000+ 11,540,000+ 32,575,000+ RM 50,705,000 Long-term Debt (Bond) Common Equity Total Debt and Equity RM 18,341,000€ The company's management estimates that the market requires 16 percent return on its common stock, the firm's bonds command a yield to maturity of 8.5 percent, and the firm faces a tax rate of 33 percent. At the end of the previous year Stargate Nation's common stock was selling for a price 1.6 times its book value, and its bonds were trading near their par value.< t Explain the current capital structure of Stargate Nation Sdn Bhd. Calculate the cost of capital for Stargate Nation Sdn If Stargate Nation Sdn Bhd stock price fall to 0.7 times book value and the cost of equity fell to 13.5 percent, calculate the firm's weighted average cost of capital (assume the cost of debt and tax rate do not change).< 32,364,000 RM 50,705,000€

Stargate Nation Sdn Bhd operates a very successful manufacturing plant in Batu Kawan Industrial Area. The company needs to raise funds for its planned expansion into the Northern Part of Malaysia. The firm's balance sheet at the close of 2021 appeared as follows:< a. b. Cashe Accounts Receivable Inventories Net Plant and Equipment C. Total Assets RM 2,210,000+ 4,380,000+ 11,540,000+ 32,575,000+ RM 50,705,000 Long-term Debt (Bond) Common Equity Total Debt and Equity RM 18,341,000€ The company's management estimates that the market requires 16 percent return on its common stock, the firm's bonds command a yield to maturity of 8.5 percent, and the firm faces a tax rate of 33 percent. At the end of the previous year Stargate Nation's common stock was selling for a price 1.6 times its book value, and its bonds were trading near their par value.< t Explain the current capital structure of Stargate Nation Sdn Bhd. Calculate the cost of capital for Stargate Nation Sdn If Stargate Nation Sdn Bhd stock price fall to 0.7 times book value and the cost of equity fell to 13.5 percent, calculate the firm's weighted average cost of capital (assume the cost of debt and tax rate do not change).< 32,364,000 RM 50,705,000€

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter21: International Cash Management

Section: Chapter Questions

Problem 3IEE

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