A balance sheet of the company, total bonds is $3,000,000 (Par $1,000,annual coupon 8%p.a., 4 years to maturity); the equity include preference share $3,000,000 and ordinary shares is $6,000,000; so the total is 12,000,000. the company's bank has advised the interest rate on any new debt finance provided for the projects is 9% p.a. and if the debt issue is of similar risk of same time to maturity and coupon rate. Now, it has 1,000,000 preference share on issue and pay dividend $0.25 per year. the preference shares sell $3.20. Company has 1,000,000 ordinary shares and sell for $3.25 each and expects to pay a dividend of $0.3 per share at the end of next year. Dividends have increase 4%p.a. at an annual rate and will continue in future. Tax rate is 30%.
Could you use dividend growth model to find cost of equity, Could you also show the after tax cost of capital for each source of finance and after-tax weighted average cost of capital for company