Assuming that a firm pays tax at 50% rate, compute the after-tax cost of capital in the following case:

i) A preference share sold at Rs. 100 with a 9% dividend and a redemption price of Rs. 110 if the company redeems it in 5 years.

ii) An ordinary share of company, which engages no external financing, is selling for Rs. 50. The earnings per share are Rs. 7.50 of which 60% is paid in dividends. The company reinvests retained earnings at a rate of 10%.

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