13. Answer ALL parts a) Consider Wotsit PLC, a UK company with an equity cost of capital of 15% and a debt cost of capital of 10%. The company has a debt to equity ratio of one (D/E = 1). i. Suppose the company operates in a world without taxes. Find the weighted average cost of capital of this company (assuming no tax). (5 marks) ii. Now suppose that the company has to pay corporation tax at a rate of 30%, and find the after-tax WACC of this company. Compare and contrast your result in this part with that of part (i), and briefly explain any difference. (5 marks) iii. Explain which of the two results in parts (i) and (ii) is the appropriate cost of capital to use if you are evaluating an all-equity financed project with the same risk as Wotsit PLC. (5 marks) 13. Answer ALL parts a) Consider Wotsit PLC, a UK company with an equity cost of capital of 15% and a debt cost of capital of 10%. The company has a debt to equity ratio of one (D/E = 1). i. Suppose the company operates in a world without taxes. Find the weighted average cost of capital of this company (assuming no tax). (5 marks) ii. Now suppose that the company has to pay corporation tax at a rate of 30%, and find the after-tax WACC of this company. Compare and contrast your result in this part with that of part (i), and briefly explain any difference. (5 marks) iii. Explain which of the two results in parts (i) and (ii) is the appropriate cost of capital to use if you are evaluating an all-equity financed project with the same risk as Wotsit PLC