10.5 Richelieu Investments Limited has the following capital structure, which is considered ideal, taken from the annual report and market data as at December 31, 2010: Price Dividend per Unit per Share 10% bonds Preferred shares Common shares Retained earnings Balance Sheet $100,000,000 20.000.000 200.000.000 50.000.000 Market Value $90,000,000 15.000.000 $90.00 30.00 30.00 N/A N/A $2.50 N/A * There are 7 million shares outstanding at a market price of $30 per share. The corporate income tax rate is 30%. The dividends on common shares are expected to grow at 5% per year. Required: (a) Determine the cost of capital as at December 31, 2010, for each of the following components: (i) Debt (G) Preferred shares (iii) Common shares, (b) Calculate the weighted average cost of capital for Richelieu Investments Limited