Astra ple's directors are currently considering a 15 million investment in a new long-term project. The company's finance director is seeking to establish an appropriate cost of capital figure for the project appraisal. Assume that the current date is 31 December 2021, the company's financial year end. The Balance Sheet of the company shows the following: Ordinary share capital (nominal value 1 per share) 40 million 8% irredeemable preference share capital (nominal value 1 per share) 15 million 7% debentures (nominal value 100 each) 20 million The total ordinary dividend for the year ended 31 December 2021 is 8.16 million. In the year ended 31 December 2017, the total dividend paid was 7.25 million. Astra plc's directors and shareholders expect future dividends to grow at the annual growth rate implied by the dividends paid in 2017 and 2021. The number of ordinary shares in issue has not changed during this period. The 7% debentures are redeemable at par in 10 years' time. The rate of corporation tax is assumed to be 28% for the foreseeable future. The market prices for the company's shares and debentures on 31 December 2021 are: Ordinary shares 8% irredeemable preference shares 7% debentures 2.10 each (ex-dividend) 1.08 each (cum-dividend) 112 per 100 nominal (cum-interest) Astra plc's finance director is proposing to finance the project with a public offer of new equity. The marketing director proposed that a 1 for 5 rights issue of ordinary share should be made at 20% discount to the current share price of 2.10 per share in order to raise the amount of finance. The human resources director suggested that convertible bonds could be considered as an alternative. The managing director has, however, expressed some concerns. He commented that funds for this project should be raised solely through a new issue of 5% debentures and that the debenture interest rate of 5% should, therefore, be the appropriate discount rate to use in appraising the new investment. The production director, on the other hand, commented that she could not understand why the company should be concerned about the cost of capital when it has access to retained profits, as they have no cost. Required: (a) Calculate Astra plc's existing Weighted Average Cost of Capital (WACC) as at 31 December 2021