The net income after tax (before dividend) of Momo inc. is $ 7,320,000. The company paid an annual dividend of $ 0.10 per share to preferred stock holders. Currently, the capital structure of the company is as follows:

Debenture bond

Preferred share (Number of preferred shares: 7,500,000)

Ordinary share

Market value

$ 10,000,000 $ 15,000,000 $ 5,000,000

$ 35,000,000

Cost

10% 12%

Knowing that the tax rate is 40%, answer the remaining questions.

a) Calculate the bond's coverage ratio.

b) Calculate the coverage ratio of the debenture.

c) Calculate the preferred stock coverage ratio.

d) Determine the required return on the preferred shares.

e) Assuming that all profits have been distributed as dividends and knowing that the expected growth rate on common stock dividends is 2% to infinity. Determine the return required by common shareholders.