(7+7+7+7+7=35 marks) A firm has issued $6 million bonds that pay a 7.5% annual coupon and the yield to maturity is 7%. The market price of the bonds is $5.5 million There are 3 million preference shares outstanding, which have a book value of $1.2 per share and which are trading for $1.40 per share. The preference shares pay an annual dividend of $0.28 per share. There are 8 million ordinary shares outstanding, which have a book value of $1.25 per share and which are currently priced at $1.10 per share. The firm's ordinary shares have a beta of 1.15. The yield on long-term governInent bonds is 2.5% p.a. The long-term market risk premium is 8% p.a. The corporate tax rate is 40%. a) What is the market value of preference shares (7 marks) b) What is the cost of preference shares [7 marks] c) What is the market value of ordinary shares [7 marks] d) What is the cost of ordinary shares [7 marks] e) What is the firm's weighted average cost of capital (WACC)? [7 marks]