Awan Biru Technology Bhd is considering investing in a new project and has the following capital structure:

Awan Biru Technology Bhd has three alternatives to finance its long-term financing

• The firm has 17 percent cost of debt before tax. The corporate taxes are announced at 25 percent.
• A preferred share issues at RM125 per share which pays an annual dividend of RM4.25 per share. The current price of preferred share is RM99.50.
• The common shares are currently selling at RM105 per share. The firm paid a dividend of RM5.75 per share last year. This dividend is expected to grow at a constant rate of 3.5 percent per year. The flotation cost is valued at RM6.25.

Based on the information below, calculate:

i. Cost of debt (k_d).