a) Discuss the three major sources of capital often used by companies to finance the investments. Why should you consider the internal capital cost while calculating the cost of capital? (4+2 - 6 marks) b) Company Anon Ltd. has $20 million debentures at a coupon rate of 12% per annum. The current market value of the debentures is $17.95 million based on the current yield of 15% per annum on the debentures of similar risk rating. The company has 500,000 preference shares of worth S5million and 10 million ordinary shares of worth $15 million. The current market price for the company's preference shares is $4 and the price for its ordinary shares is $3.90. The company has been paying dividends on its preference shares at 14% and on its ordinary shares at 17% per annum, which the company expects to continue in future. 1. Calculate the total market values of preference shares and ordinary shares separately (3 marks) 2. Calculate total market value of the company and the proportion (weight) of each individual sources of capital to the total capital. (3 marks) 3. Calculate the company's weighted average cost of capital (WACC) based on the market value of the company (4 Marks) Previous