Lipservice Ltd$,$ a company providing dating services, is considering revising its weighted average cost of capital $($WACC$).$ It has a project under consideration and the WACC has not been reviewed for a while.

The company has the following capital structure:

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$500000$ R$2$ ordinary shares with a current market value of R$2,70$ per share. The company has paid a dividend of $65$ cents per share last year and they expect the dividend to grow by $5\%.$

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$100000$ R$1$ preference shares yielding $10\%$ with a current market value of R$2,20$ per share.

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R$20000010\%$ debentures, issue price at R$1$ and market value at R$1,35.$

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R$7500008\%$ bank loan.

The corporate tax rate is $28\%.$

Required

$2\mathrm{.}1$ Briefly describe what is meant by capital structure in the context of WACC? $(2)$

$2\mathrm{.}2$ Calculate the weighted average cost of capital $($WACC$)($using the Gordons Growth model for valuing ordinary equity$)(24)$

$2\mathrm{.}3$ If the project yields a return of $18\%,$ should the company invest in this project? Please substantiate your answer. $(2)$

$2\mathrm{.}4$ What other factors would one consider before deciding to accept or reject this project? $(2)$