Debt: The firm can sell a 12-year, RM1,000 par value, 7 percent bond for RM960. A flotation cost of 2 percent of the face value would be required in addition to the discount of RM40.

Preferred Stock: The firm has determined it can issue preferred stock at RM75 per share par value. The stock will pay a RM10 annual dividend. The cost of issuing and selling the stock is RM3 per share.

Common Stock: A firm's common stock is currently selling for RM18 per share. The dividend expected to be paid at the end of the coming year is RM1.74. Its dividend payments have been growing at a constant rate for the last four years. Four years ago, the dividend was RM1.50. It is expected that to sell, a new common stock issue must be underpriced RM1 per share in floatation costs. Additionally, the firm's marginal tax rate is 40 percent.