The B.U. Strong Company is considering a capital budgeting project which would require an initial outlay of one million dollars. The project will provide income from which fully franked dividends can be paid. The balance sheet currently stands as follows:
Long-term Debt $44.8 million Ordinary Equity $79.8 million Preference Shares $15.4 million
The market value of debt is $50 million, there are 39.9 million ordinary shares currently valued at $3 each, and preference shares are valued at $15.4 million. Please calculate cost of capital of ordinary shares, preference shares and debts.