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= Mrs. SS has just been hired to compute the cost of capital of debt, bonds, preference shares and ordinary shares for Angle Mind Corporation

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= Mrs. SS has just been hired to compute the cost of capital of debt, bonds, preference shares and ordinary shares for Angle Mind Corporation (AMC) Ltd: Because AMC's short term and long term debts do not trade very frequently, Mrs. SS has decided to use 9% as cost of debt, which is the yield to maturity on a portfolio of bonds with a similar credit rating and maturity as AMC's outstanding debt. In addition, AMC faces a corporate tax rate of 30% AMC's bonds are frequently traded. An AMC bond has a $1000 face value and a coupon interest rate of 10% that is paid semi-annually. The bonds are currently selling for $1125 and will mature in 5 years. AMC's preference shares pay a 7% dividend on a $125 face value. The market price at which the preference shares could be sold is only $90. AMC's corporation tax rate is 30%. AMC's ordinary shares paid a $1.25 dividend last year. Firm's dividends are growing at a rate of 6% per year and this growth rate is expected to continue into the foreseeable future. The price of these shares is currently $30. The risk-free rate is 7.5% per annum and the average expected rate of return in the market is 16.5% per annum, also AMC's ordinary shares have a beta of 0.64. Under the assumption that the firm's present capital structure reflects the appropriate mix of capital sources for the firm, it is determined the market value of the firm's capital structure as falla *S Source of Capital Market Values Debt $12,750,000 Bonds $5,500,000 Preference Shares $3,500,000 Ordinary Shares $7,500,000 Retained Earnings $1,550.000 Required: (a) What is AMC after-tax cost of debt?(b) What is the cost of AMC's Bonds? (c) What is AMC's cost of preference shares? (d) What is the cost of AMC ordinary shares? (e) What is AMC's cost of retained earnings based on the CAPM? ( What is AMC's WACC

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