Don Bradman has been employed by Bowral Pty Ltd to assist them in calculating their after$-$tax, Weighted Average Cost of Capital $($WACC$).$ Upon researching the company Bradman has found the following information.

The market risk premium is $7\%$

The Beta of the stock is $1\mathrm{.}2$

The dividend paid last year was $$1$

The expected growth rate in dividends is $3\%$

The company issued preference shares for $$5$ that pay a dividend of $12\%.$ The current shareprice is $$3\mathrm{.}50.$ There are a million shares on issue.

The company issued ordinary shares for $$4$ per share but the price on the ASX is currently

$$9\mathrm{.}50.$ There are $10$ million shares on issue.

The company issued bonds $5$ years ago with an issue value of $$5$m$.$ The bonds currently tradeat par and have a coupon a rate of $6\%$ per annum. Coupons are paid semi$-$annually.

The tax rate for the company is $30\%$

The Debt to Equity Ratio of the firm $($based on market values$)$ is currently $0\mathrm{.}5.$

$1.$ Determine the required return on ordinary equity.

$2.$ Determine the EAR of the bonds on an after tax basis.

$3.$ Determine the required return on preference shares.

$4.$ Determine weights of Bonds, Ordinary Shares and Preference Shares.

$5.$ Determine the weighted average cost of capital $($WACC$).$