A]Define the cost of Capital and what rote dose if play in the firm's long term investment decisoins? [Hint provide with explanation ,formulas and solutions]

by Zaraton Company is interested in measuring its overall cost of capital. Current investigation has gathered the following data. The firm is a 40% tax bracket Debt The firm can raise debt by selling RM1.000 par values.coupon rate, 20 years bond on which annual Interest payment will be made. To set the issue, on average discount of RM20 per bond would have 10 be given. The firm maloso pay notation costs of of the par value Preferred stock the firm can set preleted stock at its RMS per hore pat value. The stock will pay an RB.DO annua dividend. The cost of issuing and selling the proforca stock is cxpectod to be RM3 pet share. Prefented stock can be sold under these terms D Common stock That's common stock is currently soling for RM40 por shoro Thoirm expects to pay cash dderds of RM5.07 per share next years. The firm's dividends nave been growing at an arewa rate of 9.45 and this growth is expected to continue Into the future. The stock must be underpriced by RMI pervice and clation couts are compacted to annount to RM per share. The firm can sol now common stock under these terms Calculate the after-sax coat of debt. (1.5 mars R. Calculate the cost of proferrod stock 11. marts 11 Calculate the cost of common stock (15 more) iv. Ceniculate the WACC for Zaratan Company in the firm has exhausted cal retained ecoming The weighted average costs to be measured by using the toucwing weights: 30long-term debt, preferred The welghted average cost to be mesured by using the following weight: 305 tong-term debt, 35 prelesed stock and 69% common stock equity. 11.5 merci c) frozen Bethod is attempting to select the best of two mutualy exclusive projects. The company's board of drectos has set a maximum 4-yecx paytack requirement. The initiat investment and atter-teze cash Intlows associated with these projects are shown in the following tablo. Year 0 Project A RM 150.000 45000 Project B RM 150.000 75000 2 45000 3 45000 60000 30000 30000 30000 4 45000 5 45000 6 45000 30000 1) Calculate the payback period for each project. 12 marts) Calculate the net present VARUO (NPV) of each project, assuming that the firm has a cost of capital equal to 9% (2 marks) Calculate the internas rate of retum (IRR) of each project, 12 moros)