PROBLEM 9.1 Assuming that a firm pays tax at a A per cent rate, compute the aftendav cost of capital in the following cases: () A 8.5 per cent preference share sold at par.. (i) A perpetual bond sold at par, coupon rate of interest being 7 per cent. (ii) A ten-year, 8 per cent, 1000 par bond sold at 950 less 4 per cent underwriting commission. (iv) A preference share sold at 100 with a 9 per cent dividend and a redemption price of 110 if the company redeems it in five years. (v) An ordinary share selling at a current market price of 120, and paying a current dividend of *9 per share, which is expected to grow at a rate of 8 per cent. (vi) An ordinary share of a company, which engages no external financing, is selling for 50. The earnings per share are 7.50 of which sixty per cent is paid in dividends. The company reinvests retained earnings at a rate of 10 per cent.