$6.$ The ordinary shares are currently trading at R$46\mathrm{.}45.$ A dividend of $80$ cents per share has just been paid and the directors estimate that the dividends will increase by $8\%$ each year in perpetuity.

$7.$ Preference shares are trading at R$2\mathrm{.}75$ and have a par value of R$2\mathrm{.}40.$

$8.$ The debentures have a par value of R$50$ and are currently trading at R$45.$ The debentures are redeemable at R$55$ in ten years. The company tax rate is $27\%$

As an alternative to the existing capital structure for Good Clothing $($Ltd$),$ a corporate finance advisory has suggested the following modifications:

Ordinary shares $($equity$)35\%$

Preference shares $5\%$

Debt $60\%$

Under this new and more debt$-$orientated arrangement, the after$-$tax cost of debt is $10\mathrm{.}8\%,$ the cost of preference shares is $11\%$ and the cost of equity is $15\mathrm{.}6\%,$ resulting in a WACC of $12\mathrm{.}49\%.$

Calculate the weighted average cost of capital $($WACC$)$ for Good Clothing Ltd$.$

Tip:

$$ Calculate each capital components cost separately. $(8$ marks$)$

$$ Calculate each capital components market value separately. $(3$ marks$)$

$$ Calculate the WACC with the above costs and weights.

$(4$ marks$)$