Part A (5 Marks) You are a junior consultant in a firm of management consultants. Your team recently met with the Chief Financial Officer (CFO) of Supabucks Lid, a company listed on the JSE Ltd. The CFO made the following statement during the meeting: "Our company is funded with equity, and we have no debt. I do not like owing anybody any money and debt will cost interest, which is expensive." REQUIRED: Critically analyse the CFO's statement by answering the following question: 1.1 Is debt more expensive than equity? Briefly explain your answer. (5) Part B (15 Marks) You are a senior manager at Mopani property developers Ltd. Mopani requires R95 million to invest in a new project. The CFO of the company has requested you to assist him and has provided you with the following information: 1. Mopani recently paid a total dividend of R16 800 000 representing a dividend yield of 3.5%. The dividend will grow by 5% till perpetuity. 2. The company's capital structure consists of debentures and ordinary shares. 3. Debentures were issued three years ago and will mature in seven years' time. The debentures pay a coupon rate of 10% annually, and the market-related cost of these debentures is 8.9%. 4. Mopani includes flotation costs in the net present value calculation. The flotation costs for equity issues are 16% and debt issues carry flotation costs of 8%. 5. The company has 100 000 bonds with a par value R6 850 each and 1 000 000 ordinary shares in issue. REQUIRED: Assist the CFO' by answering the following questions: 1.2 Calculate the weighted average flotation cost of Mopani. (12) 1.3 Calculate the initial cost of financing the new project (including flotation (3) costs)