Weighted Average Cost of Capital

Question 1

The following information is available on the long term financing of Sigma plc:

m

Ordinary shares of 1 each (15 million) 15

7% irredeemable debentures 28

The current share price is 290p and the market value of debentures is 93 (per 100 nominal).

A dividend of 12 pence per share has just been paid. The expected growth rate of dividends is 6%.

The corporation tax rate 25%

a) Calculate the weighted average cost of capital (WACC) for Sigma plc.

I'm still quite unclear on how to calculate cost of debt. Please provide a full detail methods of calculation