The table shows the year end book value balance sheet for the company A. ($Millions)

Assets		Liabilities and Equity
Cash	$1	Bonds	$10
A/R	3	Preferred Stock	2
Inventories	7	Common stock	10
Plant and Equipment	21	R/E	10
Total	$32	Total	$32

The bond has a face value of $1000, whose coupon rate is 8%. Coupon are paid annually, and the bond will mature in 10 years. The current yield to maturity is 9%. The preferred stock has a par value of $20 per share. The beta of the common stock is 1.5; the market risk premium is 7%