(Question 2) Banana Leaf Bhd has the following capital structure, which it considers optimal. Bonds, 10% (selling at par) Preference shares Common shares RM 400,000 RM 600,000 RM1,000,000 RM2,000,000 Total Additional information: . The market price of the firm's preferred shares is RM92. The firm pays 12 percent dividend at RM100 par value. Flotation cost of a new issue of preference shares is RM1 per share. . Last year's dividend on common shares was RM2.80 per share and is expected to grow at a constant rate of 7 percent. Market price per share of common share is RM18.50. The flotation cost of new common share is 5 percent. 36 . The firm's tax rate is 28 percent. (a) Determine the following: i. The firm's cost of debt. (2 marks) ii. The firm's cost of preferred share. (3 marks) iii. The firm's cost of common share. (5 marks) iv. The firm's weighted average cost of capital. (5 marks) (b) As issuing firm, discuss TWO (2) Banana Leaf Bhd advantages and disadvantages of long-term financing. (10 marks) 25 marks