Q$2)$ LTS is a retail chain company currently at its target debt$-$equity ratio of $1.$ The company is

considering opening a new RM$5,000,000$ retail complex in Kluang, Johor. This new retail

building is expected to generate after$-$tax cash flows of RM$731,150$ per year in perpetuity. The

tax rate is $20\%,$ and there are two financing options available to the company:

A RM$5$ million new issue of common stock. The issuance cost of the new common

stock would be about $10\%$ of the amount raised. The required rate of return on the

company's new equity is $20\%.$

ARM$5$ million issue of $30-$year bonds. The issuance costs of the new debt would be $2\%$

of the earnings. The company can raise new debt by $10\%.$

Recommend the optimal capital structure based on the given financing options for the proposed

retail complex.