1. The interest rate on the bank loan is 8.8% p.a.
2. The interest rate on the mortgage loan is 5.7% p.a.
3. The corporate bonds have a credit rating of BBB+ and have 3 years to maturity. They require semi-annual coupon payments at a coupon rate of 8% p.a.
4. 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 are expected to pay a dividend of $0.10 next year. The dividend is expected to grow at a rate of 10% p.a. for the following 4 years and, after that, it will grow at a constant rate of 4% p.a. in perpetuity.
5. 5. 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 $0.11, and they are currently trading for $1.19.
6. 6. The market risk premium is 6.7%.
7. 7. The corporate tax rate is 30%. The 3-year risk-free rate is 2.93%. The 10-year risk-free rate is 3.56%

QUESTION:

- Calculate the before-tax cost of bank loans, mortgage loans, and corporate bonds

- Calculate the (market) value of bank loans, mortgage loans, and corporate bonds

SSETS SSETS