QUESTION $4$

$[28]$

Suppose that you are the director of Turn$-$X Holdings and that you aru fo calculate the cost of capital of the company on the following proposed copital structure of the company:

$2$ million ordinary shares with a market price of R$3$ per share. The latest dividend doclared was $90$ cents per shara. A dividend growth of $13\%$ was maintained for the past $5$ yearn.

$1\mathrm{.}5$ mill on $12\%$ R$1$ preference sharan with a market value of R$2$ per ahare.

R$1000000$ a$\%$ debantures due in $7$ years and the current yinid$-$to$-$maturity is $10\%$

R$110000014\%$ bank loan, due in December $2023.$

Additional Information

The company has a tax rate of $30\%$

The beta of the company is $1,8,$ a risk free rate of $5\%$ and the refurn on the market la $15\%.$

Required:

$4\mathrm{.}1.$ Calculate the weighted average cont of capital $($WACC$)$ Use the Gordon Growth Model to calculase the coer of equity.

$(21)$

$4\mathrm{.}2.$ Calculate the cost of equify using pie copidal asset pricing model $($CAPM$)$ and calculate the adjusted WACC basec on CAPM.

TOTAL

$[100]$