Upped Ltd is financed only by equity, valued at $R20$ million. Upped Ltd pays a dividend of R $2200000$ to its shareholders annually.

Downed Ltd$\text{'}$s capital structure includes debt, valued at $R5$ million $($based on market value$),$ in addition to equity valued at $R20$ million. Downed Ltd$\text{'}$s debt incurs interest paid of $R400000$ per annum, where dividends are paid to shareholders amounting to R$1500000$ per annum.

Upped Ltd and Downed Ltd are identical in all operating and risk characteristics, both based and operating in South Africa, where tax is payable at $27\%.$ Assume there is no growth in dividends. Assume the debt is irredeemable.

Required:

$4\mathrm{.}1$ Calculate the value of the equity of Downed Ltd$.$

$(2$ marks$)$

$4\mathrm{.}2$ Calculate the cost of capital for Upped Ltd$.$

$(1$ mark$)$

$4\mathrm{.}3$ Calculate the cost of equity for Downed Ltd$,$ and the cost of debt for Downed Ltd$.(4$ marks$)$

$4\mathrm{.}4$ Calculate the weighted average cost of capital of Downed Ltd$.$

$(3$ marks$)$