(a) The total market value of the equity of Aerotech Inc is $140 million, while the book value of equity is $60 million. The total market value of its debt is $60 million, the book value of the debt is same as the market value. The beta of the stock is 1.25 and the expected market return is 12%. The risk-free interest rate is 2%, and investors assume that Aerotechs debt has a yield-to-maturity of 4%. Estimate the WACC assuming a tax rate of 25%. Should you be using the estimated WACC and apply it to all projects evaluated by the Aerotech? Discuss. (40 marks)

(b) Charles makes a saving by depositing $1000 at the beginning of every quarter for eight quarters. How much will he have after 2 years if the promised interest rate is 8% quarterly compounded? (20 marks)

(c) Critically discuss the major types of security issued by firms to raise long term capital. (40 marks)