Tabah Corporation has 14 million shares of common stock outstanding, 900,000 shares of 9 percent preferred stock outstanding and 210,000 ten percent semiannual bonds outstanding, par value RM1,000 each. The common stock currently sells for RM34 per share and has a beta of 1.15, the preferred stock currently sells for RM80 per share, and the bonds have 17 years to maturity and sell for 91 percent of par. The market risk premium is 11.5 percent, T-bills are yielding 7.5 percent, and the firms tax rate is 32 percent. The after tax cost of debt is 7.61%. The market value of debt and the firm is RM191,100,000 and RM739,100,000 consecutively. What discount rate should the firm apply to a new projects cash flows if the project has the same risk as the firms typical project? Show your workings. (10 MARKS)

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