TK= Currency

a) "Although debt and equity capital are both sources of external financing used by firms, they are very different in several important respects. Justify the statement. b) Elk County Telephone has paid the dividends shown in the following table over the past 5 years. Year Dividend per share (Tk.) 2020 1.40 2019 1.29 2018 1.20 2017 1.12 2016 1.05 The firm's dividend per share next year is expected to be Tk. 1.50. i. If you can earn 12.5% on similar-risk investments, what is the most you would be willing to pay per share? ii. What required rate of return for this stock would result in a price per share of Tk. 43.142 c) Jim Design wishes to estimate the value of its outstanding preferred stock. The preferred issue has a Tk. 90 par value and pays an annual dividend of 8% on par value. Similar-risk preferred stocks are currently earning a 10.7% annual rate of return. i. What is the market value of the outstanding preferred stock? ii. If an investor purchases the preferred stock at the value calculated in part i, how much does she gain or lose per share if she sells the stock when the required return on similar-risk preferred stocks has fallen to 9.2%? Explain