PLEASE HELP TO ANSWER I WOULD APPRECIATE AND THUMB UP IN ANYWAY

Delight Inc. is looking to determine its cost of capital and has asked you to assist.

Information available include the following:

Preference Shares: The preference shares were issued for $12 with a 5% dividend. The current market price is $18. There are 10m shares on issue

Debt: It has bonds on issue with a face value of $1000 that currently pay a quarterly coupon of 10%. These bonds currently trade at par. 500,000 bonds are on issue

Ordinary Shares: The company also has 100 million ordinary shares on issue with a market price of $4 each.

Current risk-free rate is 5%, market return is 8% and the company has a beta of 2.

The company is expected to pay a dividend of 40 cents next year with expected growth of 2%.

Other Information:

The tax rate is 40%.

Calculate the following:

A) Determine the after-tax cost of debt. (2 Marks)

B) Determine the required return on the preference shares. (2 Marks)

C) Determine the required return of the ordinary equity using the CAPM. (2 Marks)

D) Determine the required return of the ordinary equity using the dividend discount model (DDM). (2 Marks)

E) Determine the weight of debt, ordinary equity, and preference equity to be used in the calculation of the after tax WACC. (3 Marks)