Mussa Holdings (Pty) Ltd has an established retail outlet network in the greater part of Johannesburg. The business has a capital structure of 6 000 000 R2 ordinary shares, a market price of R2,50. Their preference shares are 1000 000 15% R1 preference shares, market price R1,50. Reserves R1 100 000. They have received a bank loan from Standard Bank of R500 000 10%. Debentures R 650 000 12,5% market price R115(issued at R100).

In order to equalise the tax effect, the debenture and bank loan interest weighting is reduced by multiplying it by 1 minus the given corporate tax rate (27%).

The current and expected future rate of ordinary share dividends is 25%.

a) Calculate the Weighted Average Cost of Capital.

Mussa Holdings (Pty) Ltd has an established retail outlet network in the greater part of Johannesburg. The business has a capital structure of 6000000R2 ordinary shares, a market price of R2,50. Their preference shares are 100000015% R1 preference shares, market price R1,50. Reserves R1 100000 . They have received a bank loan from Standard Bank of R500 00010%. Debentures R 65000012,5% market price R115(issued at R100). In order to equalise the tax effect, the debenture and bank loan interest weighting is reduced by multiplying it by 1 minus the given corporate tax rate ( 27% ). The current and expected future rate of ordinary share dividends is 25%. a) Calculate the Weighted Average Cost of Capital