1. From the following information provided by Intel Ltd calculate the weighted cost of capital.

000

6% bonds (redeemable in 5 years) 4,650

7% irredeemable bonds 8,500

Ordinary shares (0.50 nominal value) 6,400

8% Preference shares (0.60 nominal value) 9,000

1. The current dividend, shortly to be paid, is 27p per share. Dividends in the future are expected to grow at a rate of 6% per year.
2. Corporation tax is currently 20%
3. Stock market prices as at 31 December (all ex dividend or ex interest):

Ordinary shares 5.10

Preference shares 85p

6% bonds 97 per 100 bond

7% irredeemable bonds 102 per 100 bond