QUESTION 6 (10 points) A firm has determined its optimal capital structure which and target market value proportions. is composed of the following sources Source of Capital Proportions Long-term debt Preferred stock 20% 10 70 Common stock equity Debt: The firm can sell a 12-year, RM1,000 par value, 7 percent bond for RM960. A flotation cost of 2 percent of the face value would be required in addition to the discount of RM40 Preferred Stock: The firm has determined it can issue preferred stock at RM75 per share par value. The stock will pay a RM10 annual dividend. The cost of issuing and selling the stock is RM3 per share. Common Stock: A firm's common stock is currently selling for RM18 per share. The dividend expected to be paid at the end of the coming year is RM1.74. Its dividend payments have been growing at a constant rate of 3 percent for the last four years. It is expected that to sell, a new common stock issue must be underpriced RMI per share in flotation costs. Additionally, the firm's marginal tax rate is 40 percent a, what is the firm's before-tax and after-tax cost of debt? b. Calculate the firm's cost of preferred stock and cost of a new issue of common stocks. c. Calculate the firm's weighted average cost of capital assuming the firm has exhausted (4 points) 2 points) 4 points) all retained earnings