The interest rate on the bank loan is 8.2% p.a. (shows 240 on balance sheet)

The interest rate on the mortgage loan is 5.2% p.a. (shows 530 on balance sheet)

The corporate bonds have a credit rating of AA and have 2 years to maturity. They make quarterly coupon payments at a coupon rate of 7% p.a. There are 190 Corporate bonds.

The Ordinary shares are shown on the balance sheet at their book value of $1 per share. They have a beta of 1.2. They have just paid a dividend of $0.07. The dividend is expected to grow at a rate of 7% p.a. for the next 3 years, and after that it will grow at a constant rate of 3% p.a. in perpetuity.

There are 430 ordinary shares on the balance sheet.

The preference shares have a par value of $1 each and are shown on the Balance Sheet at their par value. They pay a constant dividend of $0.10 and they are currently trading for $1.2 There are 250 Preference shares.

. The risk premium for ordinary shares is 8%.

The corporate tax rate is 30%. The 2-year risk-free rate is 0.03%. The 10-year risk-free rate is 1.14%

a) Calculate the before-tax cost of bank loans, mortgage loans, and corporate bonds (6 marks). b) Calculate the (market) value of bank loans, mortgage loans, and corporate bonds (6 marks). c) Calculate the cost of ordinary shares and preference shares (6 marks). d) Calculate the market prices of ordinary shares and preference shares (4 marks). e) Calculate the total market values of ordinary shares and preference shares (4 marks). f) Calculate the companys WACC (4 marks).