QUESTION 3 ArusLancar Berhad is interested in measuring its overall cost of capital. The firm is in the 30 percent tax bracket. Current investigation has gathered the following data. a) The firm can raise an unlimited amount of debt by selling RM1,000 par value bond, 8 percent coupon interest rate, 12 years bonds on which annual interest payments will be made. To sell the issue, an average discount of RM50 per bond will be given. The firm must also pay floatation cost of RM50 per bond. (8 marks) b) The firm is going to sell 10 percent (annual dividend) preferred stock based on par value. The par value is rm100 per preferred stock. The selling price of the preferred stock is expected to be RM100 with a floatation fee of RM5 per share. (4 marks) c) The firm's common stock is currently selling for RM60 per share. The firm paid cash dividends of RM6 per last year. The firm's dividends have been growing at an annual rate of 8 percent, and this rate is expected to continue in the future. The stock will have to be under-priced by RM5 per share upon floatation, and floatation costs are expected to be RM5 per share. (6 marks) Determine and justify which alternative should ArusLancar Bhd choose. (2 marks)