3. The following information relates to the Fortescue Metals Group Ltd. Fortescue has 10,000 bonds outstanding with a face value of $1,000 each, which have 5 years to maturity and pays an-annual 10% coupon. The yield on the bonds is 10% p.a. Fortescues corporate tax rate is 30%. Fortescue has 5 million preference shares on issue, which are currently trading for $10.00 each, giving a total market value of $50 million. They pay an annual dividend of 50 cents per share. Fortescue has 7 million ordinary shares on issue, which are currently trading for $12.00 each. These shares are expected to pay an annual dividend of $1.00 next year, and this dividend is expected to grow at a constant rate of 2% in perpetuity.

a. What is Fortescues cost of debt?

b. What is Fortescues cost of preference share capital?

c. What is Fortescues cost of ordinary share capital?

d. What is Fortescues Weighted Average Cost of Capital (WACC)?