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Question 6 Here is some information about Stellenbosch Ltd.: Beta of common stock = 1.2 Treasury bill rate = 6.15% Market risk premium = 4%

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Question 6 Here is some information about Stellenbosch Ltd.: Beta of common stock = 1.2 Treasury bill rate = 6.15% Market risk premium = 4% Yield to maturity on long-term debt = 6% Book value of equity = R800 million Market value of equity = R980 million Book value of interest bearing liabilities = R880 million Market value of interest bearing liabilities = 790 million Corporate tax rate = 28% a. What is the company's weighted average cost of capital? (15 Points) b. What is the expected return on Stellenbosch Ltd. stock if a 5% movement in the market portfolio is expected? (5 Points)

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