QUESTION 10 14 points Save Answer Munenzwa Led has 15 million shares in issue trading at a price of $32 per and will declare a dividend of $2 next year. The company has debt with a market value of $110m in bonds and the yield to maturity on the bonds is 119%. It also has 0.5 million preference shares in issue with a market value of $97 per share and a preference dividend of $5 per share. If the beta of the company is 1.6, the risk-free rate is 5.5%, the market risk premium is 8% and corporation tax rate is 309%, determine: a. Cost of Equity (for ordinary shares). (4 marks) b. After tax cost of debt. (2 marks) c. Cost of preference shares (3 marks) d. Weighted average cost of capital (5 marks) Formulae to use: Cost of preference shares (Kp) = Dp/PO Cost of ordinary shares (Ke) = Rf + Beta x (Rm - Rf) - CAPM formula WACC = We x Ke +Wp x Kp +Wd x Kd x (1 -Tc)