Based on the information, 1. Calculate the cost of capital for each alternative 2. Justify the best alternative for this company.

a) Syawal Corporation has decided to venture into a new product line that necessitates the firm to raise RM20 millions worth of external funds. The following are three major sources available: Bond A 10 year, 15 percent bond selling at RM950 while floatation cost is 5 percent of the par value of RM1,000. The current tax rate of the firm is 40 percent. Preferred Share Preferred share with a dividend rate 6.2 percent issued at RM100 at par. The cost of issuing these stocks are estimated at 8 percent of selling price of RM90. Common Stock The firm's common stock is selling at RM40. The floatation cost is 3 percent of selling price. At present, the company's growth rate is 5 percent and the dividend just paid RM 1.80