NRM Limited is a property development. The company wants to develop a state of the art office complex.In order to finance this project , the company plans to issue 10 000, 10 years and 15% coupon bonds. Each bond will be issued at a par value of R 1 000. In order to make the bonds attractive to investors, the company plans to issue the bonds at a discount of 2.5% x 6 marks

1. If the issue will result in flotation costs of 3% being incurred, what is the before-tax cost of the bond(YTM)?
2. Assuring that NRM Limited is taxed at 30%what is the after-tax cost of the bond? x 3 marks
3. Part of the funds required for the state of the art office complex will be raised from the issue of R 500 000 ordinary shares at the price of R 100 per share.Flotation costs on the new shares are expected to be R 2.50 per share. NRM Limited has just paid dividend of R 5 per share on its existing ordinary shares. Dividends on ordinary shares are expected to grow at 10%per annum into the foreseeable future. Using Gordon's dividend growth model, calculate the cost of the ordinary shares. x 6 marks
4. In order to preserve its current capital structure, NRM Limited also plans to issue 100 000, 12% preference shares with a par value of R 50 per share. Flotation costs on the preferences shares are expected to amount to R 2.50 per share. Using the information given above, calculate the cost of NRM Limited's preference shares. x 5 markes
5. Using your answers to, as well as information given in, QUESTION 2.1-2.4 above, calculate NRM Limited's weighted average cost of capital(WACC) X 10 marks

Please do include the steps