You have been asked to calculate the cost of capital of CMR Inc.

The firm has has $2000$ zero coupon bonds. Each zero coupon bond has a face value of $$1000,$ will mature $6$ years from today, and is currently priced at $70\%$ of the face value. The company has $500,000$ common shares outstanding, and each share is currently trading at $$15.$ You have decided to use CAPM to calculate the cost of equity. The risk$-$free rate is $5\%,$ and market risk premium is $10\%.$ The beta of the company is $2.$ Also, the company has $200,000$ preferred shares. Each share is trading at $$10,$ and the constant yearly preferred dividend per share is $$1\mathrm{.}5.$ Finally, the company faces a tax rate of $40\%.$