6 The directors of Zeus plc are considering opening a new manufacturing facility. The finance director has provided the following information:

Initial capital investment: £2,500,000.

Dividends for the last five years have been:

The following is an extract from the Balance Sheet of Zeus plc for the year ended December 31 1997:
Creditors due in more than one year 8% Debenture £700,000 Long-term loan (variable rate) £800,000 Capital and reserves 2,000,000 shares of 25p each £500,000 The authorised share capital is 4 million shares, the current market price per share at December 31 1997 is 136p ex-dividend.
The current market price of debentures is £60 (ex-interest) and interest is payable each year on 31 December.
The interest rate on the long-term loan is 1 per cent above LIBOR, which at present stands at 16 per cent.
The debentures are irredeemable.
Ignore taxation.
Required Calculate the weighted average cost of capital (WACC) for Zeus plc at 31 December 1997.

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Year 1993 1994 1995 1996 1997 Net dividend per share (pence) 10.0 10.8 11.4 13.2 13.7