A publiclyheld corporation hasrecently reported the following financialstatements as of 31/12/2020.

The company has outstanding 1 million shares of common stock, currently traded at a price of 9/share in Borsa stanbul.

a. If the riskfree rate of interest (current yield on shortterm Tbills) is 19%, the stock market is expected to return 23% next year and the companys estimated (CAPM) beta is 1.2, what is the required rate of return on its equity?

b. Calculate the companys weighted average cost of capital.

Balance sheet Assets Liabilities and equity Short-term assets 5,000,000 Debt 12,000,000 Long-term assets 8,000,000 Equity 1,000,000 Income statement (2020) Sales 50,000,000 COGS 40,000,000 Other expenses 5,000,000 EBIT 5,000,000 Interest on debt 2,400,000 Net taxable profit 2,600,000 Net profit after taxes 2,028,000