Question 1 30 pts INSTRUCTIONS: Satisfy what is being asked for. Round off final answers to two (2) decimal places and include the percentage sign, do not put spaces in between your answer For example, if you final answer is 10.23 percent it should be encoded as 10.23% in the space provided. Please take note that final answers are the only items that needs rounding off. Use all of the decimals in the processes that you need to undertake for you to arrive at exact final answers. Also, please be reminded that canvas' way of checking the answers is case and character sensitive so please follow the instructions carefully. MTC Corporation's top management wants to measure the company's overall cost of capital. The following data were gathered by their finance department: . The firm's common stock is currently selling for P97.00 per share. The firm expects to pay cash dividends of P8.00 per share next year. The firm's dividends have been growing at an annual rate of 6%, and this growth is expected to continue into the future. The stock must be under-priced by P7.00 per share, and flotation costs are expected to amount to P5.00 per share. The firm can sell new common stock under these terms. Furthermore, the company's finance department identified that the risk-free rate is at six percent; the market return is ten percent; and the firm's beta is 2.061855. . The firm is in the 40% tax bracket. The firm can raise debt by selling P1,000-par- value, 7% coupon interest rate, 20-year bonds on which annual interest payments will be made. To sell the issue, an average discount of P30.00 per bond would have to be given. The firm also must pay flotation costs of P30.00 per bond. . The firm can sell 5% preferred stock at its P95-per-share par value. The cost of issuing and selling the preferred stock is expected to be P8.00 per share.. The firm is in the 40% tax bracket. The firm can raise debt by selling P1,000-par- value, 7% coupon interest rate, 20-year bonds on which annual interest payments will be made. To sell the issue, an average discount of P30.00 per bond would have to be given. The firm also must pay flotation costs of P30.00 per bond. . The firm can sell 5% preferred stock at its P95-per-share par value. The cost of issuing and selling the preferred stock is expected to be P8.00 per share. Preferred stock can be sold under these terms. The firm uses the weights shown in the following table, which are based on the target capital structure proportions to calculate its weighted average cost of capital. SOURCE OF CAPITAL AMOUNT Long-term debt 60,000 Preferred stock 90,000 Common stock 150,000 Total 300,000 REQUIRED: 1. what is the company's after-tax cost of debt? 2. what is the company's cost of preferred stocks? 3. what is the company's cost of retained earnings?4. what is the company's weighted average cost of capital using retained earnings? 5. what is the company's weighted average cost of capital using new issue common stocks?Question 2 15 pts Using your answer in number 5 of PROBLEM 1 (PART 1), along with the information shown in the following table on the available investment opportunities, which, if any, of the available investments do you recommend that the firm accept? Explain your answer. INVESTMENT INTERNAL RATE OF RETURN INITIAL OPPORTUNITY (%) INVESTMENT A 8.2 100,000 B 7.7 500,000 C 8.9 150,000 D 5.5 200,000 E 8.8 450,000 F 4.1 600,000 G 7.51 300,000