Question 3 (10 points) BMR Corporation's capital structure consists of three sources: common shares and debt. Here are the information about these sources of capital: A. Bonds: There are two types of bonds issued by BMR Corp. Bond 1 is a zero-coupon bond which has a market price of $800, four years to maturity, and a face value of $1,000. BMR corp. issued 600 units of this bond. Bond 2 offer an annual coupon. The coupon rate is 6%, Yield to Maturity is 11.2%, it has five years to maturity, and a face value of $1,000. BMR corp. issued 900 units of this bond. B. Common Shares: There 140,000 units of common shares outstanding. Risk-free rate is 4.2%, and the market risk premium is 10%, covariance between BMR stocks and the market is 0.75, and the standard deviation of the market is 0.63 BMR Corp. expects to pay its first dividend at the end of the third year and it is expected to be $1.00. Moreover, analysts expect that the dividends will grow at 5% perpetually after that point. Calculate the cost of capital of BMR Corporation assuming that corporate tax rate is 30%