a) b) d) Companies nance their operations using Debt and/ or Equity (common or preferred). Each nancing source comes at a cost. State and distinguished between the cost of debt and the cost of equity. In addition, discuss the cost of capital. Include in your discussions when should a rm discount at the cost of debt, cost of equity or cost of capital? (4 marks) Your lecturer encourages you to invest in a rm on the Asian continent. The rm has a total asset base of US$20 million. Number of ordinary shares outstanding is 3.9 mil with a value of US$2.00 per share. The rm debt has a yield of 8% on its debt. Your research reveals that the current Treasrny bill rate in Asia is 5.5% and that the beta for similar rms in the industry is 1.2. You discussed the idea with a friend and he informs you that the expected market return on the Asian stock market is 16% and that the tax rate is 40%. Compute the weighted average cost of capital (\\X'ACC). (6 marks) Hint (computation for CAPM if required) Andrew is a member of the compliance unit at your company, he pointed out that no discussion of how businesses will operate is complete without a discussion on the Principal Agent problem. Outline what the PrincipalAgent problem and recommend one way the problem can be alleviated. (3 marks) Explain to a group of interns two (2) benets the Sole Proprietorship business structure. (2 marks)