1.ABC plc has issued 10,000,000 ordinary shares of a nominal value of $1 each. Details of the company's earnings and dividends per share during the last four years are as follows:

Year ended 31 Decemberearnings per sharedividend per share

1994$0.35$0.26

1995$0.33$0.27

1996$0.43$0.29

1997$0.42$0.30

The current, December 1997 market value of each ordinary share of ABC plc is $2.35 cum div.

The 1997 dividend of $0.30 per share is due to be paid in January 1998. Estimate the cost of capital for ABC plc's ordinary share capital