Johnson and Johnson (Pty) Ltd is an international company with headquarters in New Brunswick, New Jersey, and is the world's most comprehensive and broadly based manufacturer of healthcare products. The business has expanded into third-world countries starting with a branch in Johannesburg, South Africa. The business has a capital structure of 10 000 000 R1 ordinary shares, and a market price of R2. Reserves R5 000 000. They have a received bank loan from Investec Bank of R10 000 000 15%. Debentures 5 000 000 at par value 12, 5% market price (issued at R100). To equalize the tax effect, the debenture and bank loan interest weighing is reduced by multiplying it hy 1 minus the given corporate tax rate (27%). The current and expected future rate of the ordinary share dividends is 15%.

1. Calculate the overall market value.
2. Calculate the cost of capital for ordinary shares, preference shares, bank loan and debentures.
3. Calculate the Weighted Average Cost of Capital (WACC) for ordinary shares, preference shares, bank loan, and debentures.

Answer rating: 100% (QA)

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