1. Following is the capital structure of a company. 12% Debt Capital Common stock Capital (80000 shares) Total capital 30 lakhs 128 lakhs 158 lakhs To finance the expansion program, the company needs additional capital of Tk. 40 lakhs. There are three alternative methods of financing. 1) Through 14% debt financing 11) Through 12 % preferred stock financing III) Selling common stock shares of tk. 160 per share. Assume that 40% corporate tax rate and expected EBIT is Tk. 15 lakhs. You are required to calculate EPS under each alternative method. 2. a) Madona & Co has structured the Company's capital as follows: 8% Debenture 12% Preference Share Common Share Retained Earnings Total 100000 Tk. 50000 Tk. 120000 Tk. 30000 Tk 3000000.00 Other Information: 1. The common Shares of the company sell for TK. 30 each. II. It is expected that the company will pay next year a dividend of Tk. 2.5 per share that will grow at 4% forever. The market price of preference share is Tk. 96 (par value Tk. 100). A flotation cost of 5% of the market price would be incurred to the issue of all kinds of shares. IV. The Company's marginal tax rate is 40%. Requirements: You are required to calculate the WACC of Madona & Co. III. Helping notes for math 2: read the question carefully, then first find out the cost of debenture, preference share, and common share individually, and use these values as cost of individual cost to calculate WACC. WACC= Weight x cost of capital (For each source of capital). Then make a sum total. Weight for each source = each source / total capital