w is the weight of debt is the corporate tax rate is the cost of preference

W is the weight of debt is the corporate tax rate is

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wis the weight of debt, ࠵?}is the corporate tax rate, ࠵?~is the cost of preference shares and ࠵?~is the weight of preference shares. However, in this case, Berjaya Auto Berhad did not have cost of debt calculated and Berjaya Auto Berhad did not issue preference shares. To calculate the WACC for Berjaya Auto Berhad, only cost of capital is used. The total equity value is the closing price of the share as at 2015, RM 2.14, multiply by the total outstanding shares, 2,117,400. ____________ 12“CAPM: Theory, Advantages and Disadvantages” ACCA, assessed 1 September 2016, -studys-resources/f9/technical-articles/CAPM-theory.
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3.4 Discussion of WACC WACC is the risk profile for future project of Berjaya Auto Berhad if the future project risk is similar with current project risk. If the future project required return is higher than WACC, by theory it should be accepted, vice versa. Using the WACC to evaluate Berjaya Auto Berhad, we can see that, Berjaya Auto Berhad has maintain a good risk portfolio. We also can see that Berjaya Auto Berhad finance the company with equity, however there will be more risk on equity. As for the financial manager of Berjaya Auto Berhad, should increase the portion of debt in finance the company. This is to offset the risk of cost of equity. For Berjaya Auto Berhad to accept future project, the future project must have similar risk with current existing project, the required return of the future project must be same or higher than WACC 9.53% and the NPV of the future project have to be 0 or higher. WACC of Berjaya Auto Berhad is higher compare to the risk-free rate, 4.19%, as will result in Berjaya Auto Berhad will have difficulties in finding a positive NPV projects. ___________________ 13 “Annual Report 2016” Berjaya Auto Berhad, assessed 1 September 2016, 14 “Annual Report 2015” Berjaya Auto Berhad, assessed 1 September 2016, 15 “Annual Report 2014” Berjaya Auto Berhad, assessed 1 September 2016,
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Appendix A Appendix A indicate 20 largest shareholders of Berjaya Auto Berhad as recorded for the financial year 2016. Twenty largest shareholders as 12 July 2016 No. Name of Shareholders No. Shares % 1 Maybank Nomines (Tempatan) Sdn Bhd 196,000,000 17.11% 2 Citigroup Nominees (Tempatan) Sdn Bhd 82,870,240 7.24% 3 Amanahraya Trustees Berhad 68,200,000 5.95% 4 Permodalan Nasional Berhad 42,394,900 3.70% 5 Kumpulan Wang Persaraan (Diperbadankan) 41,794,600 3.65% 6 Amanahraya Trustees Berhad 41,356,400 3.61% 7 Amanahraya Trustees Berhad 30,570,600 2.67% 8 DB (Malaysia) Nominees (Tempatan) Sdn Bhd 18,635,000 1.63% 9 Citigroup Nominees (Asing) Sdn Bhd 17,145,240 1.50% 10 DB (Malaysia) Nominees (Asing) Sdn Bhd 16,948,120 1.48% 11 CIMB Group Nominees (Tempatan) Sdn Bhd 16,649,600 1.45% 12 Citigroup Nominees (Tempatan) Sdn Bhd 16,221,500 1.42% 13 Tunku Amirah Binti Tunku Ibrahim Ismail 14,948,360 1.31% 14 Amanahraya Trustees Berhad 14,500,980 1.27% 15 Cartaban Nominees (Tempatan) Sdn Bhd 14,499,820 1.27% 16 Cartaban Nominees (Asing) Sdn Bhd 14,386,180 1.26% 17 CIMB Group Nominees (Tempatan) Sdn Bhd 14,000,000 1.22% 18 Amsec Nominees (Tempatan) Sdn Bhd 12,938,100 1.13%
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