Reference is made to the 2022 Balance Sheet of Tram-Ropes limited. Tram-Ropes Limited Balance Sheet 2022

Cash 1,000,000.00 Accounts Payable 8,000,000.00 Acc. Receivable 12,000,000.00 Notes Payable 8,500,000.00 Marketable securities 3,000,000.00 Long-term Debt 20,000,000.00 Inventories 7,500,000.00 Common stock 7,500,000.00 Fixed Assets 26,500,000.00 Preferred Stock 6,000,000.00 Total Assets 50,000,000.00 Total Liabilities and Equity 50,000,000.00.

Additional Information: i. The Long-Term debt consists of 8% annual coupon bonds, with 15 years to maturity and are currently selling for 95% of par. ii. The companys common shares which have a book value of $20 per share are currently selling at $25 per share. PREPARED BY THE CI, MGMT2023 4 iii. Preferred shares have a book value of $100 per share. These shares are currently selling at $120 per share and pays dividends of 6% per annum on book value. iv. The dividend growth rate is expected to be 3%, and dividend for 2023 is projected to be $5.00 per share. v. The Companys Tax rate is 30%.

Required: Determine the following for Tram-Ropes Limited:

A. Total Market value of the firms capital structure (3 marks)

B. After-tax Cost of Debt (2 marks)

C. Cost of Common Stock (2 marks)

D. Cost of Preferred Stock (1 mark) E. WACC (2 marks)