The Management of Tanjung Uda Berhad is planning a RM4,000,000 expansion this year. The expansion can be financed by issuing either common shares of bonds. The new common share can be sold for RM$5 per share. The bonds can be issued with a 12% coupon rates. The firms existing preference share pay dividends of RM$2 per share. The companys corporate income tax is 30%. The financial statement of Tanjung Uda Berhad is as follow:-

Tanjung Uda Berhad Balance Sheet as at 31st December 2022 Current Assets RM$ 2,000,000 Fixed Assets RM$ 8,000,000 RM$ 10,000,000 Current Liabilities RM$ 1,500,000 Bonds: (8.5%, RM1,000 par value) RM$ 4,000,000 (9%, RM1,000 par Value) RM$ 1,000,000 Preference Shares (RM$ 100 par value) RM$ 500,000 Ordinary Shares (RM$ 2 par value) RM$ 2,400,000 Retained Earnings RM$ 600,000 RM$ 10,000,000 Required:

Required: a) Calculate the indifference level of EBIT between the two Plans. b) If EBIT is Expected to be RM1,500,000 which plan will result in a high EPS? c) Calculate the WACC for the company without taking into consideration the expansion plan mentioned above, which means using the original Balance sheet figures. Also, the dividend payment for common stock is 8% and Preferred stock is 5% and the cost of capital for Retained earnings is 7%.