EXERCISE 7 OKB Development Berhad has to decide which of the following four projects should be selected: PROJECTS INITIAL INVESTMENTS (in IRR (%) RM) SOFIA 550.000 13 AURORA 400.000 15 AMBER 600.000 10 MULAN 350,000 12 The company capital structure consists of RM350.000 debt. RM200,000 preferred shares and RM450,000 common equity. The current cost of debt (before taxes) is 10% for the first RM200,000. The cost of any additional debt (betore taxes) is 13%. The after tax cost of preferred shares is 8% for the first RM300,000. However, if the company requires more than RM300,000 the cost will increase to 10% The current market price of its common equity is RM32. The company's current dividend is RM3.50 per share. The expected growth rate in carnings and dividends is 8%. If new common stocks are issued, it will incur floatation cost of 12% of selling price. The marginal tax rate is 25% i) Determine the breakeven points ii) Determine the weighted average cost of capital (WACC) for all the identified range of financing iii) Construct the weighted marginal cost of capital (WMCC) curve