a. Consider yourself as the CFO of Green Energy Solutions Ltd., planning to finance a new solar power plant project. Considering the 27.5% corporate tax bracket, and a 4% flotation cost for issuing both types of stocks, you want to calculate the cost of each capital component with the following information:

The company can issue new preferred stocks for BDT 35/share, with an annual dividend of BDT 4.50/share.

Common stocks with a current market price of BDT 40/share. The expected dividend.

for the next year is BDT 3.50/share, and it is expected to grow at a constant rate of 3%

per year.

Also, if the company needs additional funds, that can be borrowed from DCCL Bank Ltd. at 15% interest per annum.

b. After the cost calculations, you decide to raise 40% of the required capital using common stocks, 30% using bonds, and the remaining using preferred stocks. What is the weighted average cost of capital (WACC)?

C. Can you minimize your cost of capital if you alternate the proportions of financing using common stocks and bonds that you did in (b)? What is/are the key contributing factor(s) here?