BFSB is a subsidiary of a listed firm. BF Berhad (BFB) which the firm's stock had been traded on Bursa Malaysia since its initial public offering in 2010. In the first quarter of 2021, BFB had outstanding AA-rated debt of RM350 million. It has a stock price of RM20 per share, with 25 million shares outstanding. It also has RM150 million in outstanding preference shares. The recent epidemic has had a huge impact on the business recovery of BFB. The fimm must transform to new business model to more flexibly respond to the challenges in the post-epidemic era. Using big data and artificial intelligence, management has decided the transformation to include e-commerce, payment, finance and logistics. BFB would like to estimate the weighted average cost of capital (WACC) for the business transformation. Relevant financing arrangements are as follow: Debt: The firm can sell a 10-year, 9 percent non-callable bond at par. The firm must pay 2 percent of the face value in flotation cost for the issue of this BBB-rated bond. Preference share: New preference share of BFB can be issued at a price of RM55 per share, with an RM5 annual dividend. The cost of issuing and selling the stock is RM2 per share. Ordinary share: BFB plans to pay a dividend of RM1.60 per share next year with a constant growth rate of 3 percent in the foreseeable future. Malaysian treasury bonds yield 4 percent, while the market risk premium is 10 percent. The share return of BFB is 30 percent less volatile than the market retun. The firm's marginal tax rate is 26 percent. Determine the WACC for BFB in financing the business transformation, assuming the firm has exhausted all retained earnings. (15 marks)