Jee Wa Kacau Co. has 500 units of outstsanding bonds which is currently price at RM1080
per bond. The company has bonds outstanding with 15 years left before maturity. The interest
is paid annually at a rate of 10 percent. The firm’s tax rate is 25 percent.
The company also has 400,000 units outstanding shares of preferred stock that pays a
RM0.50 dividend per share and sells for RM10 per share in the market.
Jee Wa Kacau’s common stock is trading at RM25.00 per share, and its dividends are
expected to grow at a constant rate of 5%. The company paid a dividend last year of RM2.50
per share and has 1,500,000 units outstanding shares.
a) Determine the weighted average cost of capital (WACC) for Jee Wa Kacau.
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