Given below is information about three RM1000 par value bonds, each of which pays coupon semiannually. The required rate of return on each bond is 10%. a) Without performing any calculations, determine whether each bond should sell at a discount, par value or premium. b) Calculate the bond market price. QUESTION 3 ABC is considering a few projects for its investment. The company has determined its optimal capital structure, which composed of the following weightage: Bonds 30% Preferred Stock Common stock equity 65% Bonds: - The firm is considering to sell a 20 year, RM1000 par value bond with coupon interest of 9% at the price of RM980. A floatation cost of 2% of the face value would be required in addition to the discount of RM20. Preferred Stock: - Issue preferred stock of RM100 par but selling at 6.5% below its par value. The stock will pay dividend an 10% of par The cost of issuing and selling the stock is 3% of the selling price. Ordinary Share: The firm ordinary share is currently selling at RM40 per share. The previous dividend was sold at RM3.45 and is expected to have a constant growth of 5% per annum in their next payment. Floatation cost is 5% of the selling price. Tax rate is at 35% a) Calculate the cost of debt, cost of preference shares and cost of ordinary share b) Calculate the WACC using the said capital structure