MHP’s cost of debt

The following information relates to MHP Ltd.
MHP has 7 million ordinary shares on issue, which are currently trading for $12.00 each. These
shares are expected to pay an annual dividend of $1.00 next year, and this dividend is expected to
grow at a constant rate of 2% in perpetuity.
MHP has 5 million preference shares on issue, which are currently trading for $10.00 each, giving a
total market value of $50 million. They pay an annual dividend of 50 cents per share.
MHP has 10,000 bonds outstanding with a face value of $1,000 each, which have 5 years to maturity
and pay an-annual 10% coupon. The yield on the bonds is 10% p.a. SHP’s corporate tax rate is
30%.
i. What is MHP’s cost of debt? (2 marks)
ii. What is MHP’s cost of preference share capital? (2 marks)
iii. What is MHP’s cost of ordinary share capital? (2 marks)
iv. What is MHP’s Weighted Average Cost of Capital (WACC)? (14 marks