Lexton Limited has an equity beta of $1\mathrm{.}10.$ The market risk premium in Zambia is expected $($ER$.o.$ A to be $5\%$ and the yield on government bonds is currently $7\mathrm{.}5\%.$ Lexton has issued bonds and its $K100$ par value bond is currently trading at $K94\mathrm{.}50.$ The coupon rate is $8\%.$ The maturity date is five years' time and the corporation tax rate is $28\%.$ Interest is payable annually in arrears, The company has just paid the coupon interest for the current year.

REQUIRED:

a$)$ What is Lexton's cost of equity, based on the Capital Asset Pricing Model $($CAPM$)?$

$(5$ Marks$)$

b$)$ What is the after cost of debt?

$(5$ Marks$)$

c$)$ Lexton paid a dividend of $K0\mathrm{.}12$ per share and the dividend per share is expected to grow at $7\%$ indefinitely. The company's share price is K$2\mathrm{.}30.$ What is the company's cost of equity using the dividend growth model?

$(8$ Marks$)$

d$)$ What is the weighted average cost of capital $($WACC$)$ if the target debt$-$equity ratio is $50\%?($Use the cost of equity as per CAPM$)$

$(7$ Marks$)$