QUESTION TWO Milestone ltd ltd has issued a 10-year ksh 19,200,000 11% debenture at ksh 18.800,000. The debenture is redeemable at a premium of 5%. It has also issued a new 11% preferred stock with a par value of ksh.560 at a discount of 4%. The common stock of the company is currently selling for ksh. 25.00 a share and currently paying a dividend of ksh 1.50 per share. The dividends are expected to grow at a rate of 6% per year. The corporation tax rate applicable to the company is 30%. The company has shared its capital in the ratio 50%: 30% and 20% between equity, debt and preference shares respectively. On the investment frontier the company has invested in a security which will provide 10 annual cash payments, starting next year amounting to ksh. 350,000 and increasing 6% per year thereafter. Required: How much is this security worth now? (10 Marks)