Analyse the capital structure and dividends growth with the following information that is available:

Current share market value is £5.

Current dividends are 35 pence each year

Constant growth rate of 6% each year

With a syndicated loan, which is a debt that has to be paid back by a certain date, the annual interest charge before taxes is £120,000 on a loan of £2,000,000.

Bonds are currently being traded on the market. There are 220,000 of them, each with a face value of £10 and a pre-tax payment of 10% each year to bond holders.

At the moment, the market value of these bonds is £9.

The tax rate for firms is currently 32%.