(a) Preference shares: 250,000 preference shares of nominal value 50 sen per share. The market value of the shares is 42 sen per share and the annual dividend of 3.5 sen per share has just been paid. Required: Calculate cost of preference share to Rachel plc. (3 marks) (b) Bonds: RM100,000 of 7% 5 years redeemable bonds with a market value of RM109 per RM100 par. The annual interest payment has not been made yet. The bond will be redeem at par value at the end of Year 5. Corporation tax rate is 30%. Required: Calculate cost of debt (after tax). (12 marks) (c) List the key assumptions of perfect capital market underlie the Modigliani and Miller models