Magenta GmbH is a German company based near Frankfurt and manufactures and exports various types of sausages to many markets throughout Europe.

Assume that it is 1 January 2023.

The company is financed as follows:

Ordinary shares (1 nominal value) 50 m

4% Bond repayable 31 December 2027 30 m

3.5% bank term loan 15 m

The ordinary shares are currently trading on the Frankfurt market at 3.25 per share.

The market value of the 4% bond is 104 per 100 bond and each bond is redeemable at a 5% premium.

The risk free rate of return is 2% and the market premium for risk is 5%. Magenta GmbH has an equity beta of 1.1.

Magenta GmbH pays corporate taxation at a rate of 20%.

Required: Using market values where appropriate, calculate the following:

1. The cost of equity

2. The cost of the 4% bond

3. The cost of the bank loan

4. The weighted average cost of capital