1. Suzuki Limited uses a combination of shares and debt in their capital structure. The details are given below: · There are 7 million ordinary shares in issue with a par value of R2.20 each and the current market price is R7 per share. The latest dividend paid was R0.84 and a 9.5% average growth for the past six years were maintained. · The company has 5 200 000 R6, 8% preference shares with a market price of R4.20 per share. · Suzuki Limited has a public traded debt with a face value of R5 million. The coupon rate of the debenture is 7% and the current yield to maturity of 10%. The debenture has 6 years to maturity. · They also have a bank overdraft of R0.9 million due in 5 years’ time and interest is charged at 15% per annum. Additional Information: · Suzuki Limited has a beta of 1.7, a risk-free rate of 6% and a return on the market of 13%. · Company tax rate is 28%. 
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3. Required:
4. 1 Calculate the weighted average cost of capital, using the Gordon Growth Model to calculate the cost of equity. 
5. 2 Calculate the cost of equity, using the Capital Asset Pricing Model.

Answer rating: 100% (QA)

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