ABC capital structure is made up of; CAPITAL STRUCTURE DEBT Bonds EQUITY Preference Shares Ordinary Shares ABC Ltd. has 120,000 bonds outstanding with a face value of $100 each. These bonds have 5 years to maturity and pay an annual coupon of 7.5%. ABCs statutory corporate tax rate is 30%. Moodys Corporation is one of a big ratings agency which has given ABC Ltd. a debt rating of AAA. The following table shows the current yields available in the market based on debt ratings. The risk-free rate offered by the government on bonds is 1.7%. Debt rating Risk premium AAA 5.8% AA 6.5% BBB 7.2% BB 7.5% ABC Ltd. has issued 4 million preference shares, which pay an annual dividend per share of $0.375. They are currently trading at $3.75 each. ABC Ltd. has issued 8 million ordinary shares, which are currently trading at $5 each. Shareholders are to receive a dividend of $0.70 per share in the current year, and this dividend is estimated to grow at a constant rate of 2.5%in perpetuity.

What is the market value of ABCs bonds? (show all the workings clearly)