Hi there, the left side is the question and the answer is on the right side of the paper. My question is on Debentures. How did they found 1600 (Look MV)? Regards

Cost of Capital Octoel Cost of Capital 1 The following financial information relates to the operative of Miller Miller Lid: Selected Balance Sheet data Mortgage loan PV-5600.000 10.12 PMT-510,000 5 Liabilities Accounts payable 10% Debentures, 5500 per value Mortgage loan 250.000 SO DOO 600,000 Shareholders 46 Preference sharel, 51,000 pur value Onlinary here, id and paid up at 510 Rebined earning 500.000 2.000,000 300,000 FV-5500 Effective anale (1 00112212-1 -17.00 Aber-tax cost-17060801-03) - 11.9487 MV - 5600.000 Copen Debeatures PMT -10% 5500/2 192 PV-5552.8156 Effective walmate-10.08 2 1 -16% After-tax cost-10% 03) -5,712 MV - 55523156 1.600- 5884,505 Preference share (1.0001998-8.016% MV-51.000 500-5500,000 Ordinary shares -1.40/163 +004-12.4848% MV - $16.50 200,000 - $3.300.000 Additional information Debeures currently outstanding were sold at a face value of $500 each and pay a somi al coupon at a rate of 10% per annum. The outstanding debentures have seven years to maturity. A new neon similares would require a coupon rule of per to be fully subcribed at face value The em of the mortgage loan is 20 years and it has 10 years remaining until maturity. A fired monthly payment of S10,000 would rahle the outstanding principal of 600,000 to be fully paid at maturity Mille has just a new preference shares ata pe value of $1.000 per share. The costs of sing and selling the preference shares were 52.00 per share i) The ordinary share are currently trading at $16.50 each w Miller's dividend next year is expected to be 140 per share, and it is expected to grow at annual rate of 4% in perpetuity The company income tax rate is 30 cents is the dollar You are required to calculate the after-tax weighted average cost of capital (effective annual rate) for Miller Lid 2. Lecture 8. Example ABC Lad & Tutorial Question 6 - Woodwork Lud. Cost of Capital Mortgage loan 10% Debenares 8% preference shares Ordinary shares 17010 Marker Pro 600,000 0.1135 884,505 0.1674 500.000 00040 3.300.000 06245 5.284.505 10000 801 12485