Question 2 (25 marks) The following information was available from the Namibian Stock Exchange (NSX) and the past and forecast financial statements of Wooltru Plc. 2013 2014 2015 2016 Dividend per share N$0.60 N$0.63 N$0.65 N$0.6955 200 000 Ordinary shares of N$1 each N$200 000 Nominal value 6% Preference shares N$5 each N$2 000 000 Nominal value 7% Mortgage bond N$3 000 000 Nominal Value Additional Information 1. The Namibian Government 3-months Treasury bill currently pays 6.5% and does not change with time.

2. The equity beta of the company is 1.6 while the return on an average asset is 13.5%. 3. From 2016, dividends shall grow constantly forever at a rate equal to the growth in dividends from 2015 to 2016. 4. Preference shares are perpetual and have a required return of 8%. 5. The bonds yield to maturity is 6% and it matures in 10 years time. The bond also pays interest twice annually. 6. The tax rate is 28%. Required: Calculate the weighted average cost of capital (WACC) of the company.