You have been hired as a consultant to Oppo Ltd. The company is looking at building a research and production facility t

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You have been hired as a consultant to Oppo Ltd. The company is
looking at building a research and production facility to produce a
new line of smartphones. The company estimates that it will cost
R50 million to build the plant. The following current market data
on Oppo’s securities refers: • Debt: 20 000, 10% coupon bonds, 15
years to maturity, selling at a discount of R750. The bonds have a
R1 000 par value each and make semi-annual payments. • Equity: 300
000 shares in issue, selling for R20 per share; the share’s beta
coefficient is 1.5 • Preference shares: 5 000, 8% preference shares
in issue selling for R60 per share. • The preference shares have a
par value of R100. • Market: 12% return on the market portfolio; 9%
risk free rate. • Other information: Oppo’s before tax cost of debt
is 10.25% and the applicable tax rate for is 28%. 2.1 Calculate the
relevant market value capitalisation weights of the debt,
preference shares and equity. Provide your answers only on Moodle.
[6] Debt Shares = a) Market Value b) Weight Equity = c) Market
Value d) Weight Preference Shares = e) Market Value f) Weight 2.2
Calculate the after-tax cost of debt. Provide your final answer
only [2] 2.3 Calculate the cost of equity. Provide your final
answer only [2] 2.4 Calculate the cost of preference shares.
Provide your final answer only [2] 2.5 Compute the project’s
weighted average cost of capital (WACC). Provide your final answer
only