The capital structure for ABC Ltd. is given below. 8% Debentures 9% Preference shares Equity Shares Rs. 4,00,000 1,00,000 5,00,000 1,00,000 New debentures would be sold at 10% coupon rate and will be sold at par. Preference shares will have an 11% rate and will also be sold at par. Equity shares currently selling at Rs. 100/=can be sold at net the company is Rs.95. Management expects to pay a fully franked dividend at the end of the year of Rs.4/= and dividend should increase at an annual rate of 8% thereafter. The corporate tax rate is 50%. You are required to (a) Calculate cost of debt, cost of preference capital and cost of equity capital (b) Calculate the weighted average cost of capital