Patti Pancake Company is in a business that runs in the manufacture of pancakes especially Patti pancake. Patti Pancake makes pancakes with the aim to meet consumers' desire for variety of food from the durian. Here, the company uses quality materials and high quality as the manufacture of the product. The company is very innovative according to consumer demand for this type of pancake. The Patti Pancake provides a variety of flavors such as strawberry, pineapple, pendants, and others.

In order to reach more consumers geographically, to develop new innovative delivery order system, to increase existing production capacity, to renovate and expanding plant and other development activities of business Patti Pancake Company will need additional long term funds. The company is planning to raise OMR 20 million long-term funds to finance its capital requirements. You as a financial analyst help the company to compute their weighted average cost of capital using the following information.

Debt OMR 7,000,000

Preferred Stock OMR 2,000,000

Equity OMR 11,000,000

The following additional information is provided by the company.

Debt: Bonds -10% annually paid coupon, 20 years to maturity, face value = OMR 100, current price = OMR 108 each, tax rate = 15%. Assume coupons are paid yearly. These bonds are issued par and redeemable at a premium of 20%.

Preferred Stock: Par value OMR 100, 5% dividend, current price = OMR 90 per stock, flotation costs = 7.5%. 7 years to maturity. These Preferred stocks are issued at par and redeemable at par.

Equity: Number of shares outstanding 100,000, dividend per share OMR 6.000 per share, dividend 5 years ago was OMR 4.750 per share, expected to continue to grow at this growth rate. Investment banker will charge 10% of the issue for floating the common stock. current common stock price = OMR 175 per share, Compute component costs of debt, preferred stock, and common stock and also calculate weighted average cost of capital (WACC) based on book value weights if the firm needs OMR 20 million for expansion. Ans, also calculate WACC using market value weights