I got the answers. Can someone explain it?

The Nelson Cotton Company Ltd is looking to determine its cost of capital and has asked you to assist. Information available include the following: Preference Shares The preference shares were issued for $6 with a 10% dividend. The current market price is $9. When they were initially issued, they issued $36m worth of shares. Debt: The market value of Debt that matures in 15 years is $75m, trades at par and pays a 4% coupon per period (8% per year). The market value of Debt that matures in 30 years is $25m, trades at par and has an EAR of 7%. Ordinary Shares: The company also has 50 million ordinary shares on issue with a market price of $4 each. The Beta of these shares is 1.25, the market risk premium is 4% a and the risk free rate is 5%. These shares last paid a dividend of 20 cents with expected growth of 3%. Other Information: Corman's tax rate is 30% e) Determine the required return of the ordinary equity using the dividend discount model (2 Marks) 0.2(1.03) res +0.03 = 8.15% 2 f) In two sentence only, explain why the two methods used above to calculate the cost of equity may give us different answers for the same organisation. (4 Marks) -one is sensitive to growth -the other is sensitive to systematic risk -accept any appropriate answers g) Determine the weight of debt, ordinary equity and preference equity to be used in the calculation of the after tax WACC. (4 marks) Debt = Pref= Common = 100m 54m 200m 354m wa 100 = 28.25% 256 54 Wp = 15.25% 254 200 Wes = = 56.5% 354 h) Calculate the after tax Weighted Average Cost of Capital (WACC). Assume you use the CAPM cost of equity in your calculation. (3 Marks) WACC = 0.2825 x 5.51% +0.1525 X 6.67% +0.565 X 10% = 8.22%