2. The capital structure of Wezi Co ltd is given below; Ordinary shares (50n) 8% K100 redeemable loan notes 2,500,000 1,000,000 500,000 12% bank loan Reserves Total Value 300,000 3,800,000 The ordinary shares are currently trading at K2.65 ex-div per share while loan notes are quoted at K96.8 ex-int. per K100 nominal. The loan notes are redeemable at par in 4 years' time. The company expects to pay dividend of 12 ngwee per share at the end of the year. Once paid, dividend will growth at 5% per year forever. Company tax is 25%. Required: a) Calculate the firms' cost of capital (WACC) using market value weights. b) Revise the WACC calculated in (a) above using the book value weights. c) Briefly explain the importance of cost of capital in project appraisal. 2. The capital structure of Wezi Co ltd is given below; Ordinary shares (50n) 8% K100 redeemable loan notes 2,500,000 1,000,000 500,000 12% bank loan Reserves Total Value 300,000 3,800,000 The ordinary shares are currently trading at K2.65 ex-div per share while loan notes are quoted at K96.8 ex-int. per K100 nominal. The loan notes are redeemable at par in 4 years' time. The company expects to pay dividend of 12 ngwee per share at the end of the year. Once paid, dividend will growth at 5% per year forever. Company tax is 25%. Required: a) Calculate the firms' cost of capital (WACC) using market value weights. b) Revise the WACC calculated in (a) above using the book value weights. c) Briefly explain the importance of cost of capital in project appraisal