Local Mail Plc$.$ has the following capital structure:

Ordinary Shares $($par value $0\mathrm{.}20$per share$)5\mathrm{.}8$m

$3\mathrm{.}5\%$ Preference shares $1\mathrm{.}7$m

$6\mathrm{.}2\%$ Debentures $($non$-$redeemable$)13\mathrm{.}5$m

Bank Loan $($long term$)12\mathrm{.}0$m

The current share prices are $2\mathrm{.}64$ per ordinary share and $1\mathrm{.}07$ per preference share. The

recent dividend paid was $0\mathrm{.}40$ per share and dividends are expected to grow at a rate of

$3\mathrm{.}5\%$ per year into the future. The current market price of the debentures is $1\mathrm{.}034.$ The

company has a corporation tax rate of $12\mathrm{.}5\%.$ The interest cost of the bank loan has been

fixed at $5\mathrm{.}8\%$ p$.$a$.$