(a) Given the following information, calculate the weighted average cost of capital (WACC) explaining any assumptions you make along the way. The current dividend per share, do =15p The cum div market price per share, P0=325p The current earnings per share, e e0=30p The book value of capital employed =3,000,000 There are 6 million shares in issue 50,000,18% irredeemable debentures currently quoted at 130 cum int. 10,000,000,7-year bank loan at 7% above base. 200,000,10% redeemable debentures that mature in 5-years, and have a current market price of 90 ex int. Base rate =10% Corporation tax=30% [60%] (b) Discuss the assumptions behind the use of the WACC as a discount rate in investment appraisal. [40%]