At the start of year XX+1, the following information is available on Omega Inc. Securities Quantities Obligations 40,000 Preferred shares 200,000 Ordinary shares 3,000,000 The outstanding bonds were issued at face value ($ 1,000) 5 years ago. They are currently trading at par on the over-the-counter market and offer investors an annual coupon rate of 10% (interest is paid semi-annually). New bonds with an identical 10-year maturity could be sold at face value to institutional investors. Issue and subscription costs are considered negligible. The company has 200,000 preferred shares outstanding. The annual preferred dividend paid to preferred shareholders is $ 7.4997. These shares are currently trading at $ 80.875 in the market. A new issue would result in an after-tax issue and subscription fee of 3% of the price of the preferred share. Common shares trade at $ 20 on the Exchange and a new issue would bring in $ 18 net (after all fees and commissions) per share to the company. The most recent ordinary dividend paid (DO) was $ 0.54 per share. For the foreseeable future, company management expects the annual growth rate of dividend and earnings per share to be 10%. In addition, the dividend per common share of the company is normally 40% of its earnings per common share. Last year, Omega Inc. reported earnings per share of $ 1.35. The retained earnings of year XX + 1 may finance, in part, the investments envisaged by the company. The company considers its tax rate to be 40%. Questions: 1) Determine the share of bond finance (WOB) and share of common equity finance (WAO) and share of preferred stock finance (WAP) using the market values of these securities. 2) Determine the cost of bonds, the cost of preferred stocks, the cost of common stocks, and the cost of retained earnings. 3) Calculate the weighted average cost of capital of the business, assuming that: a) the company only uses bonds, preferred stocks and common stocks (does not use retained earnings). b) the company only uses bonds, preferred stocks and retained earnings (but will not issue new common stocks. Retained earnings