Peter plc. a Lusaka - based garment manufacturing company, has financed its operations through the following:

Equity shares having a market value of K 10 million. The risk - free rate of interest is 4% and the market rate of return 9%. The company has an equity beta of 0.70.

* K 25 million 12% irredeemable bonds issued some years ago. Their current market value is K 112.50 ex interest.

* A floating rate bank loan for K 10 million, repayable in seven years' time. The interest rate payable is 3% over bank base rate. Bank base rate is currently 0.5%

The company pays corporation tax of 35%

Calculate each of the following:

i) Cost of equity share capital using the capital asset pricing model

ii) After - tax cost of irredeemable debt capital

iii) After - tax cost of bank loan