Use the following information about Green Land Ltd.s capital structure to answer the questions below:

Green Landscapital structure is made up of:

	CAPITAL STRUCTURE
DEBT	Bonds
EQUITY	Preference Shares Ordinary Shares

Green Land Ltd. has 150,000 bonds outstanding with a face value of $100 each. These bonds have 10 years to maturity and pay an annual coupon of 7.5%. Green Landsstatutory corporate tax rate is 30%.

Moodys Corporation is one of the big rating agency which has given Green Land Ltd. a debt rating of AAA. The following table shows the risk premium available in the market based on debt ratings:

Debt rating	Risk premium
AAA	5.0%
AA	6.5%
BBB	7.2%
BB	7.5%

The risk-free rate is 1.5%.

Green Land Ltd.has issued 5 million preference shares, which pay an annual dividend per share of $0.40. They are currently trading at $4 each.

Green Land Ltd. has issued 10 million ordinary shares, which are currently trading at $6 each. Shareholders are to receive a dividend of $0.65 per share in the current year, and this dividend is estimated to grow at a constant rate of 3% in perpetuity.

NOTE: Round all dollar amounts to the nearest dollar and all percentages to two decimal places.

(i) What is Greens aftertax cost of debt? (1 Mark)

(ii) What is the value of Greens bonds? (1 Mark)

(iii) What is the market value of Greens preference shares? (1 Mark)

(iv) What is Greens cost of preference shares? (1 Mark)

(v) What is the market value of Greens ordinary shares? (1 Mark)

(vi) What is Greens cost of ordinary shares? (1 Mark)

(vii) What is Greens WACC (Weighted Average Cost of Capital)? (2 Marks)

(viii) Assume the preference shares issued by Green Ltd. are cumulative. Assume the company doesnt pay any dividends this year on both Preference and Ordinary Shares. Nonetheless, next year, the company estimates that $2 million will be available to be paid out as dividends. Calculate the dividends per share the ordinary shareholders are expected to receive next year? (2 Marks)