(a) The weighted average cost of capital (WACC) can be calculated as WACC = ke+ka(1 t), where E is the market value of equity, D is the market value of debt, V = E + D, k is the cost of equity, ku is the cost of debt and t is the tax rate. Briefly explain how the formula can be adjusted for a firm that has two sources equity and two sources of debt. (2 marks) (b) Using a corporate tax rate of 30%, calculate Spyware's after tax WACC based on the following information. Spyware Ltd is financed through debt and equity. Currently, Spyware just paid annual dividend of $1 per share and expect to grow at 296 p.a, and there are 1 million of these shares have been issued. Analysis indicates that the appropriate Beta for a Spyware share is 1.25. Further, the risk-free rate is 5% p.a. and the expected market return is 12% p.a. Spyware has also issued 100,000 bonds. Each of these bonds has a face value of $100, five years to maturity, pay an annual coupon of 6% and currently trade for $94.846. (6 marks) (c) Given your answer to (b), outline whether Spyware is justified in using a 15% discount rate to value all investment proposals