A firm has issued $10 million bonds that pay a 7.5% annual coupon and the yield to maturity is 8%. The market price of the bonds is $9.9 million.

There are 1.5 million preference shares outstanding, which have a book value of $1 per share and which are trading for $1.20$ per share. The preference shares pay an annual dividend of $0.24 per share.

There are 10 million ordinary shares outstanding, which have a book value of $0.75 per share and which are currently priced at $0.90 per share. The ordinary shares are expected to pay a dividend next year of $0.18 per share. This dividend is expected to grow at a constant rate of 4.5% in perpetuity.

The corporate tax rate is 30%.

a) What is the market value of preference shares?

b) What is the cost of preference shares?

c) What is the market value of ordinary shares?

d) What is the cost of ordinary shares?

e) What is the firms weighted average cost of capital (WACC)?