The company has the following capital structure

Ordinary shares 1,000,000 ordinary shares of nominal value K0.25 per share. The market value of the shares is K0.79 per share. A dividend of K0.06 per share has just been paid and dividends are expected to grow at 5% per year for the foreseeable future.

Preference shares: 250,000 preference shares of nominal value K0.50 per share. The market value of the shares is K0.42 per share and the annual net dividend of 7.5% has just been paid

Bonds: K100,000 of 7% irredeemable bonds with a market price of K102 per K100 par. The annual interest payment has just been made.

Required

Calculate the costs of the individual sources of finance. (10 Marks)

Calculate the book and market values of the individual sources of finance (7 marks)

calculate the companys current weighted average cost of capital on a book value and market value basis. (8 marks)