Please Note Currency is South African Rand

QUESTION 1 (25 MARKS) The directors of Oros Limited have appointed you as their financial consultant. They are considering new investment projects and need you to calculate the cost of capital for the company. The present capital stucture is as follows:- 4000000 ondinary shares with a par value of 75 cents per share. These shares are currenty tading at R5. 50 per share and the latest dividend paid is 40cent. An average dividend growh of 13% is maintained. 150000014% R4,00 preference shares, with a market value of R6.00 per share. R5 000000 non-distributable reserves R2 200 0008% debentures due in 6 years' ime and the curent yield-10-maturity is 6%, and R600 00013% bank loan. Additional information: - The company has a beta of 1.7, a risk fee rale of 5% and enioys a premium of 8%. - The company's tax rate is 30\%. Required: 1.1 Calculate the weighted average costof capital, using the Gordon Growt Model b calculate the cost of equity. (20 Marks) 1.2 Calculate the adjusted weighted average costofcapital, using the Capital AssetPricing Model as the cost of equity