A firm projects an ROE of 18%; it will maintain a payout ratio of 40%. The firm is expecting earnings of R3 per share and investors expect a return of 15% on the investment. ratio of the firm. (a), calculate the company's weighted average cost of capital (WACC) using market weightings.

(b). critically discuss whether you consider that companies, by integrating a sensible level of gearing into their capital structure, can minimise their weighted average cost of capital.