me B

FEB 2022
question 2(A)
=>

a) i. NP
=
RM980 x 0.95:RM931
I = 61. xRM1,000 =
RM6O
mr= 1.2x RM1,000 =
RM1,200

year Cash FlOW Discount Factor (6.) pr Discount Factor (9%) pV

O 1931) 1.008 (931) 1.000 (931)
1-10 60 7.3681 441.61 6.4177 385.06
10 1,200 0.5584 670.88 8.4224 506.88
NPV:180.69 Nor: (39.06)

kd 6 +
Ix(9. I
=

61) 8.47%
-
=

180.69 + 39.06

Id (after tax) =
8.47 1.x (1-04): 6.44

ii.kp= Rm7/(RM95 x0.93): 7.76%.

iii. Ke: t+0.03) + 0.03: 7.9%

RM8.7

iv. kne = 0.24(1+0.03) + 0.03: 8.22:1

8.7X0.9

b) Maximum capex: am1sm/(30m + 81m) /180): RM27,692, 307.69

I retained earnings is sufficient to finance; new project of Rmism. Therefore, no new share will
be issue to a public. WACC of CO is;

component of capital cost of capital-aftertax weight of Financing weighted cost

kd 6.441. 45m/180m =
251. 1.6
kp 7.76%. 18m/180 m
=
101. 0.776
Ke 7.91. 136 +817m/180m 651 3.135
=

WMCC 521
7

C) No of new bond to be issued

Bond financing: 023xRM15M =

RM3, 750,000
No of new bond:RM3,750,000 / RM931: 4,028 units
B. Step 1

(1.52x0.75)/10.75+0.25(1 -0.24)):1.2128
=
Ba

Step 2

Be
=
1.2128 x (0.7 +(0.3x0.76))/0.7=1.6078

Step 3

Ri= 31. + 1.6078(121. -3%)

Ke = 17-4702:

component of capital cost of capital aftertax

-

weight of Financing weighted cost

Va 3X(1
7
-

0.24):5.7 0.3 17/

ve 17.4702 0.7 12.23

WACC =
13.94%