QUESTION 4 (20 Marks) REQUIRED Use the information provided below to answer the following questions: 4.1 Calculate the weighted average cost of capital (expressed to two decimal places). Your answer must include the calculations of the cost of equity, preference shares and the loan. 4.2 Calculate the cost of equity using the Capital Asset Pricing Model (expressed to two decimal places). INFORMATION (16 marks) (4 marks) Cadmore Limited intends raising finance for a proposed new project. The financial manager has provided the following information to determine the present cost of capital to the company: The capital structure consists of the following: 3 million ordinary shares issued at R1.50 each but currently trading at R2 each. 1 200 000 12%, R2 preference shares with a market value of R2.50 per share. R1 000 000 18% Bank loan, due in March 2027. Additional information The company's beta coefficient is 1.3. The risk-free rate is 8%. The return on the market is 18%. The Gordon Growth Model is used to determine the cost of equity. A dividend growth of 10% per annum on ordinary shares was maintained over the past five years. The latest dividend paid was 60 cents per share. Assume that the company tax rate is 27%.