Questions 24 to 28 are based on the following case. Colour Life Berhad requires RM10,000,000 to fund their new plant in Johore and is considering three financing options. The corporate tax rate is currently 35 percent. Alternative A To issue a 10 percent, RM100 preferred share at a 5 percent discount. The cost of issuance is estimated to be 4 percent of the selling price. Alternative B To issue a 15-year, RM1,000 straight bond at a 5 percent discount. The bond will pay a 10 percent coupon annually. The floatation cost is set at 4 percent of the selling price. Alternative C To issue a common share at RM25 per share. The dividend paid was RM1.50 and it is expected to grow at a constant rate of 7 percent. The floatation cost is set at 10 percent of the selling price. 26. Compute the after-tax cost for Alternative B. Answer A. 10.60 percent B. 10.96 percent C. 7.20 percent D. 6.89 percent