A Limited has a debt with a book value of S$45 million which currently trades in the market at 83% of its face value. On the balance sheet, its equity has a book value of S$75 million with two million shares trading at S$40 per share.

a. In the calculation of the weighted average cost of capital (WACC), what weights would A Limited use?

b. Anson Limiteds pre-tax cost of debt is 13.48%. If the tax rate for A Limited is 19%, what is its effective cost of debt?

c. What are some of the drawbacks of using WACC?