Jackson limiteds limited capital structure at the end of 2017 was as follows

• 4,000,000 ordinary shares of Ksh 5 payable
• 100,000 bonds of Ksh 1000, 8% Irredeemable debentures.
• 60,000 bonds of Ksh 1000, 10% redeemable bonds.
• 500,000, 12 % Irredeemable preference shares of Ksh 10
• Ksh 80,000,000 Retained earnings

Additional information is provided as follows

1. Ordinary shares are currently selling at sh 25 each but a new issue would sell at Ksh 16.
2. Ordinary share Dividend is expected to grow at 8% per annum to infinity.
3. Irredeemable bonds are trading at 110% of par value while redeemable one at 90%.
4. Irredeemable preference shares are trading at Ksh 8
5. Redeemable bonds have 4 more years remaining at will be redeemed at par. all bonds pay interest annually. Currently, there are trading at Ksh 980.
6. The company projects its Earnings before Interest and taxes at the end of 2017 to Ksh 46,800,000.00
7. Dividend pay-out ratio is 40% and corporate tax rate is 25%.

Required:

` Compute weighted average cost of capital of the company. (Use market weights) 12 Points