Cotton On Ltd. currently has the following capital structure:Debt: $3,500,000 par value of outstanding bond that pays annually 10% coupon rate with an annual before-tax yield to maturity of 12%. The bond issue has face value of $1,000 and will mature in 20 years.Ordinary shares: $5,500,000 book value of outstanding ordinary shares. Nominal value of each share is $100. The firm plan just paid a $8.50 dividend per share. The firm is maintaining 4% annual growth rate in dividends, which is expected to continue indefinitely.Preferred shares: 45,000 outstanding preferred shares with face value of $100, paying fixed dividend rate of 12%.The firm's marginal tax rate is 30%.Required:a) Calculate the current price of the corporate bond?b) Calculate the current price of the ordinary share if the average return of the shares in the same industry is 9%?c) Calculate the current price of the preferred share if the average return of the shares in the same industry is 10%
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