The Finance Director of Modern Life plc is trying to calculate the weighted average cost of capital (WACC) of the company. The company's financing as at 1st August 2021 is as follows.

,000

Ordinary shares, 50 pence par value7,500

Reserves8,000

7% Preference shares, 1 par value12,000

6% Bonds, redeemable in 7 years' time16,000

43,500

Other information (as at 1st August 2021):

Ordinary share price (ex-div)3.65 per share

Preference share price (ex-div)84p per share

Ex-interest market price of 6% bonds92 per 100 bond

Last 5 years' dividends (most recent last)19p, 21p, 22p 24p, 26p per share

Profit tax stands at 30% per year. The company plans to appraise a new project costing 14 million that will deliver after-tax cash flows of 2 million per year for six years, at which point the scrap value of the project's assets are estimated to raise 10 million when sold off.

Required:

(a) Calculate the weighted average cost of capital (WACC) of Modern Life plc using market values for weights. And book value for weights.