December 2018: Section B Question 4 (a) Amirul ProMED Corporation needs RM5,000,000 for the purpose of opening a new production factory in Pahang. There are three (3) financing alternatives to be considered by the firm. The alternatives are. Alternative 1 Issue a 12 year, 12 percent bond selling at RM1,080. The floatation cost is 5 percent of the par value and the current tax bracket of the firm is 30 percent. Alternative 2 Issue preferred shares that pays 10 percent dividend on par value. The current price of the firm's share is RM140 and cost of issuing these shares is estimated at 8 percent of its current price. Alternative 3 The firm's common stock is selling at RM65 per share. The growth rate is at a constant rate of 6 percent and the firm has paid a dividend of RM4.00. The floatation cost would be 5 percent of the selling price. i) Compute the after-tax cost of bond, preferred shares and common shares. (14 marks) ii) Based on your answer in (i), choose the best source of financing and provide the reason. (1 mark)