Shares in MTN Corporation have a beta of .80. The market risk premium is 8%, and the risk free rate is 10%. Boones last dividend was R2.00 per share, and the dividend is expected to grow at 8% indefinitely. The share currently sells for R24.00. Boone has a target debt/equity ratio of 50%. Its cost of debt is 14% before tax, and the tax rate is 30%.

i) What is the cost of equity capital (use the average of the CAPM and growth models) (10)

ii) What is the weighted average cost of capital (WACC) (3)