$($a$)$ Mayani Inc. is a large firm listed on the local stock exchange. It has the following capital structure:

Long term capital TZS$.$ Million

Convertible debt $5$ yrs$.$: $8\%25$

Preferred shares $5\%$ coupon and nominal value of $100$ per share $15$

Ordinary share $($nominal value TZS$\mathrm{.}10/$share$)10$

Retained earnings $23$

The company's current dividend is TZS$\mathrm{.}50/$share and is expected to grow at $3\%$ per year in the foreseeable future. The ordinary shares trade at TZS$\mathrm{.}450/$share$,$ and the preferred shares trade at TZS$\mathrm{.}104/$share$.$ The convertible debt has a conversion privilege of $2$ ordinary shares per TZS$\mathrm{.}1,000$ face value at maturity. The debt currently trades at TZS$\mathrm{.}950.$ The firm$$s income tax rate is $30\%.$

REQUIRED:

Calculate the firm$$s Weighted Average Cost of Capital $($WACC$).$

$($b$)$ Discuss the value and limitations of WACC as a discount rate for use in the appraisal of capital investment projects, and the relative merits of using book values and market values to calculate WACC.