PART 1

Gertrude's Great Gloves issue bonds with a face value of $100,000, paying interest at j₂ = 10.50%, redeemable in exactly 10 years. An investor purchases the bond for $112,574.51. Calculate the cost of debt (j₂) for Gertrude's Great Gloves. You may give your answer as a percentage per annum to the nearest percent or use linear interpolation or a financial calculator to give a more accurate result.

Cost of debt = % pa

- PART 2

Hudaverdi Ltd pay current dividends of $0.62 per share with these dividends expected to grow at a rate of 1.3% per year in perpetuity. Hudaverdi Ltd shares are currently trading at $6.67 per share. What is the cost of equity finance for Hudaverdi Ltd? Give your answer as a percentage per annum to 1 decimal place.

Cost of equity = % pa