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Batelco Company has an opportunity to finance its new project, the following options available to you in order to choose the appropriate capital structure for

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Batelco Company has an opportunity to finance its new project, the following options available to you in order to choose the appropriate capital structure for the corporation. Sources Weight (W) Cost (C) Option 1 20% 7.5% Common Stocks (CS) Preferred Stocks (PS) 35% 6% Bonds (B) 45% 5% Sources Weight (W) Cost (C) Option 2 Common Stock (CS) 15% 8.5% Retained Earnings (RE) 30% 4.5% Loans (L) 55% 6% Note: the tax was 30%. Required: (10 marks) A- Analyse the Weighted Average Cost of Capital (WACC) before and after tax for each capital structure option. B-Which option you prefer to take and Why

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