XYZ ltd existing capital structure is given as follows

Capital structure

Ordinary share capital (sh 10 par) 50,000

Reserves 30,000

12 % long terms debt (par sh 100 each) 30,000

10% preference share (par sh 20 each) 20,000

The firms historical earnings and dividends have grown overtime. The earnings per share and DPS each year are as follows

YEAR EPS DPS

2010 5 2.5

2011 5.2 2.8

2012 5.5 3.0

2013 5.8 3.2

2014 6 3.5

Additional information

Ordinary shares of the company are currently selling at sh 53.5 cum dividend, debentures are currently selling at 120 sh each cum interest and preference share are currently selling at 25 each. Corporate tax rate is 30%

Required ,WACC of the firm (10 marks)