As a financial manager of Samudra Bhd, you are required to evaluate several options to raise the needed fund to finance a new project. The present capital structure of Samudra Bhd as at 31 December 2022 is as follows: Long-term debt 40% Preference shares 10% Ordinary shares 35% Retained earnings 15% Long term debt Samudra Bhd plans to issue 10-year RM1,000 par value bonds at RM960. The bonds pay an annual interest of 10% per annum. The floatation cost of 2% of the market price would be paid and the bonds will be redeemed at RM1,100. Preference shares 8% preference shares with a par value of RM100 can be issued at a 3% discount. A floatation cost of 2% of the par value must be paid. Ordinary shares Samudra Bhds ordinary shares (par value RM1) currently sell at RM6 per share. The floatation cost is RM0.50. The company paid a dividend of RM0.40 last year and the dividend will grow at a constant rate of 7% per year for the foreseeable future. Currently, Samudra Bhd has RM120,000 retained earnings that can be used to finance a new project. The corporate tax rate is 25%. Required: a. Determine: i. The firms cost of debt (after tax) ii. The firms cost of preferred shares iii. The firms cost of retained earnings iv. The firms cost of new ordinary shares

As a financial manager of Samudra Bhd, you are required to evaluate several options to raise the needed fund to finance a new project. The present capital structure of Samudra Bhd as at 31 December 2022 is as follows: Long term debt Samudra Bhd plans to issue 10-year RM1,000 par value bonds at RM960. The bonds pay an annual interest of 10% per annum. The floatation cost of 2% of the market price would be paid and the bonds will be redeemed at RM1,100. Preference shares 8% preference shares with a par value of RM 100 can be issued at a 3% discount. A floatation cost of 2% of the par value must be paid. Ordinary shares Samudra Bhd's ordinary shares (par value RM1) currently sell at RM6 per share. The floatation cost is RM0.50. The company paid a dividend of RM0.40 last year and the dividend will grow at a constant rate of 7% per year for the foreseeable future. Currently, Samudra Bhd has RM120,000 retained earnings that can be used to finance a new project. The corporate tax rate is 25%. Required: a. Determine: i. The firm's cost of debt (after tax) ii. The firm's cost of preferred shares iii. The firm's cost of retained earnings iv. The firm's cost of new ordinary shares (32 marks)