Question 2 Following are the information pertaining to the capital structure of a firm. The company cost of debt before tax is 10 percent and the corporate tax is 30 percent Preferred share is paying an annual dividend of RM6.50 and currently trade at RM79. The current market price of the common share is RM22.50 per share. The annual dividend just paid was RM1.70 per share last year and the dividend is expected to grow at a constant rate of 5 percent. The firm has agreed that its optimal capital structure should consist of 30 percent of debt, 20 percent preferred share and 50 percent in common share. Calculate: (a) Cost of debt after tax (2 marks) (b) Cost of preferred share (3 marks) (c) Cost of common share (3 marks) (d) Weighted Average Cost of Capital (WACC) (6 marks) 1. Add File