4 Calculating cost of capital (LO 5] Rylstone Lid has commenced operations with the following capital structure. Rylstone Ltd: statement of financial position as at date of incorporation (5) Assets 1000000 Sundry assets Liabilities and shareholders' funds 300 000 Debentures, 8% (10 years) Preference shares, 9% Ordinary shares, issued and paid-up, 500 000 at $1 200 000 500 000 1000 000 The company's prospectus contains estimates that it will earn $ 100 000 in the first year and pay dividends of 10 cents per share. Brokers anticipate that dividends will grow at 5 per cent per annum. The shares are currently selling at $1. The statutory company income tax rate is 30 cents in the dollar and the proportion of the tax collected from the company that is claimed by shareholders is 0.60. Calculate the cost of capital for Rylstone Ltd