Main Lands has the following capital structure (ignore reserves): Equity: 3 000 000 R1 ordinary shares, market price currently R1, 50 Preference Shares: 2 000 000 @ R0.50 yielding 10%, market price currently R0.50 Debentures: R1 000 000, 15% debentures, issued at R100, market price currently R 106,00 Bank loan: R1 000 000 15% bank loan They have paid a dividend of 10c per share last year and they expect dividends to grow by 5%. The corporate tax is 30%.

Required: 2.1 Calculate Main Lands Cost of Capital, using the Dividend Growth Model as your basis for valuing equity.