Answer the selected or provided problems. All answers that are rates must be written in percent, rounded off to five decimal places.

Topic Covered: Long-term Financing Decisions (Cost of Debt and Preferred Shares)

Problem 5: Preference Shares, Definite Life with Liquidating Value ABC Corporation plans to issue pieces of 12%, 10-year, P1,000 face value bonds that pays semiannually. It will be sold at 104 but the underwriter will charge 2% on issue price. . Additionally assume that these shares have a liquidating value of P8,200,000. How much is the cost of the preference shares using the following methods? 11. Interpolation method using multiplies of 1% 12. Yield-to-maturity formula