Recently, you have been appointed as the financial manager of Winter Blues Ltd. The company is investigating building a new shoe manufacturing plant in Kariega (former Uitenhage). The company estimates that this project will cost R4.5 million.

Consider the following current market data on Winter Blues securities:

• Debt: 18 560, 15% coupon bonds, 12 years to maturity, selling at a premium of R1 250. The bonds have a R1 000 par value each and make semi-annual payments.
• Preference shares: 23 200 preference shares in issue selling for R125 per share. The fixed preference dividend per share is R13.
• Ordinary shares: 398 750 shares in issue, selling for R80 per share; the shares beta coefficient () is 1.3.
• Market-related data: 12% average return on the market; 5% risk free rate.
• Winter Blues tax rate is 28%.

Calculate the cost of preference shares?

Calculate the cost of ordinary shares?

Calculate the weighted average cost of capita (WACC)?