Yamhash Inc. was formed in 2016 with authorization to issue 5000,000 shares of Rs.10 par value common stock and 300,000 shares of Rs.100 par value preferred stock. Out of these, 40% are cumulative and 60% are non-cumulative preferred stock. Considering the survival of the company, Yamhash Inc. is also planning to investment in marketable securities. For this sake, three stocks have been identified i.e. PSO, ENGRO, and PIA. After rigorous calculations and estimations it is found that all three stocks seem moderately correlated and the association found among all stocks is 0.35. The risks associated with all three stocks are 2%, 16% and 8% whereas historical returns are 8%, 15% and 12% respectively. Company is planning to invest 1 million in each stock. Existing shareholders are demanding dividend as no dividend is yet paid by the company. During 2016, 50% of cumulative and non-cumulative preferred stocks were issued at par and 1200,000 shares of common stock were sold for Rs.16 per share. The preferred stock is entitled to a dividend equal to 15 percent of its par value before any dividends are paid on the common stock. On May 2018, rest of the preferred shares was issued along with 500,000 common shares. In 2019, company is planning to declare dividend totaling Rs. 9,700,000.

Considering the above information, you are required to compute a single accounting number that is reported most frequently in the media and receives by far the most attention by investors and creditors. Also explain with numerical figures and calculations that how diversification has minimized the risk for the company.

Yamhash, Inc. is also evaluating its costs of capital under alternative financing arrangements. In consultation with investment bankers, Yamhash expects to be able to issue bond at par with a coupon rate of 8% and to issue new preferred stock with Rs.2.50 per share dividend at Rs.25 a share. The common stock of Yamhash is currently selling for Rs.20 a share. Yamhash expects to pay a dividend of Rs.1.50 per share next year. Market analysts foresee a growth in dividends in Invest stock at a rate of 5% per year. Yamhash marginal tax rate is 35%. Calculate costs of capital.