QUESTION 4 "The cost of capital is the rate that must be warned in order to saisty the combined required rates of return of the firm's providers of capital (Correia et al., 2015) with the above statement in mind, refer to the passage below and dowwe the questions that follow. A close colleague has been admitted into a financial graduate programme a multinational company and requests your assistance in calculation of cost of capital. He believes that he has become "rusty on this topic and that you can help as you are in your third and final year of studies, implying that your knowledge on the subject is still fresh and easier for you to remember. Your friend has given you the following information: The company tax rate is 28% Cost of debt is 8% Beta is 1.17 The most recent dividend issued is R 1.20 Dividends are expected to grow constantly at 5% The rate on government t-bills are 7% The retum on the market for similar shares are 14% The current share price is R50 per share The company is funded largely through its shareholders. The debt-to- equity ratio is 20%. a) What are the two commonly used methods used for the calculation of (5) cost of equity? Provide a brief explanation of each outlining any two differences b) Calculate the firms cost of equity utilising both methods described (10) above c) Calculate the firms cost of debt to be used in the calculation of WACC (3) d) Calculate the Weighted Average Cost of Capital (use the higher cost (7) of equity calculated above and round off to four decimal places) 00 End of Question Paperoo