QUESTION TWO [25] The directors of Greenwood Industries have appointed you as their financial consultant. They are seeking new investment opportunities and require you to calculate their weighted average cost of capital of the company. The following information relates to the present capital structure of the company: 2 million, ordinary shares, currently trading at R5.50 per share. The latest dividend paid is 80 cents per share and the growth for the past four years was 7% per annum. 1 million, 9%, R3.00 preference shares, with a market price of R2.00 each. R600 000, 14%, bank loan, due in December 2021. Additional information: The company is in the 30% tax bracket. The company has a beta of 1.4, a risk free rate of 6% and a return on the market of 18%. Required: 2.1 Calculate the weighted average cost of capital. Use the Gordon Growth Model to calculate the cost of equity. (21) 2.2 Calculate the weighted cost of equity, using the Capital Asset Pricing Model. (4)