ABCLd. has the following book vlaue capital structure:

$\backslash$table$[[$Equity share capital $(150$ million shares, Rs$.10$ par$),$Rs$.1500$ million$],[$Reserves & surplus,Rs$.2250$ million$],[10\mathrm{.}5\%$ Preference share capital $(1$ million shares. Rs$.100$ par$),$Rs$.100$ million$],[9\mathrm{.}5\%$ Debentures $(1\mathrm{.}5$ million debentures, Rs$.1000$ par$),$Rs$.1500$ million$],[8\mathrm{.}5\%$ Term loans from Financial institutions,Rs$.500$ million$]]$

The debentures of ABC Ltd$,$ are redeemable after three years and are quoting at Rs$.981\mathrm{.}05$ per debenture. The applicable income tax rate for the company is $35\%.$

The current market price per equity share is Rs$.60.$ The prevailing default$-$risk free interest rate on $10$ year GOI Treasury Bonds is $5\mathrm{.}5\%.$ The average market risk premium is $8\%.$ The beta of the company is $1\mathrm{.}1875.$

The preferred stock of the company is redeemable after $5$ years & is currently selling at Rs$.98\mathrm{.}15$ per preference share.

Required:$-$

a$)$ Calculate weighted average cost of capital of the company using market value weights

b$)$ Define the marginal cost of capital schedule for the firm if it raises Rs $750$ million for a new project. The firm plans to have a target debt to value ratio of $20\%.$ The beta of new project is $1\mathrm{.}4375.$ The debt capital will be raised through term loans. It will carry interest rate of $9\mathrm{.}5\%$ for the first Rs$.100$ million and $10\%$ for the next Rs$.50$ million