16. Al Kaanz LLC is financed through bonds (debt capital), preference shares and ordinary shares. The bonds of the firm have a market value of OMR 6.4 million. The cost of bond (debt capital) before tax is estimated to be 10 per cent. The market value of its irredeemable non- participating non-convertible preference shares is OMR 6.4 million and the rate of return being offered is 7.5 per cent per year. The company's equity shares have a market value of OMR 12.8 million, the return on risk-free government securities is 8 per cent and the risk premium for an average risk share has been 6 per cent. Al Kaanz's shares have a beta of 0.75. The corporate tax is 32 per cent. Calculate the weighted average cost of capital. (5 marks) 17. A project requires an immediate outflow of cash of OMR 500,000 in return for the following probable cash flows: State of economy Probability End of Year 1 (OMR) End of Year 2 (OMR) Recession 0.3 150000 100000 Growth 0.5 350000 300000 Boom 0.2 550000 500000 Assume that the state of the economy will be the same in the second year as in the first. The required rate of return is 8 per cent. There is no tax or inflation. a. Calculate the Expected NPV (2 marks) b. Calculate the standard deviation of NPV