Correlli Ltd, a taxation category 2 company, as done some preliminary evaluation of the following four investment projects, as detailed below: Investment A B Rate of Return (%) 18 Investment Cost ($) 200,000 125,000 150,000 275,000 16 12 10 D The latest balance sheet for the company shows: $ 1,500,000 Long-term debt Bonds: Par $100, annual coupon 16.35%, 5 years to maturity Equity Preference shares (55,000 shares outstanding, 94 cents dividend) Ordinary shares (825,000 shares issued) Total 550,000 1,650,000 $3,700,000 The company's bank has advised that the interest rate on any new debt finance provided for the projects would be 8% p.a. The company's preference shares currently sell for $9.09, and to induce investors to take up a new offering of preference shares the company would have to set the issue price at a discount of 4% off the present market price. The company's existing shares sell for $3.03 each and management has disclosed that it expects to pay a dividend of 16 cents at the end of the next year. Historically, dividends have increased at an annual rate of 9% p.a. and are expected to continue to do so in the future. The ordinary equity component to finance new projects will require new shares to be sold at a 10% discount from the current $3.03 price, and the costs for undertaking the new issue are estimated to be 30 cents per share. The company tax rate is 30%. (a) Determine the market value proportions debt, preference shares and ordinary equity comprising the company's capital structure. (b) Calculate the after-tax costs of finance for each source of finance